Chancellor Rishi Sunak has reportedly warned that homeowners could see their mortgage payments rise by more than £1,000 a year if they are not on fixed-rate deals.
According to The Times and the Daily Mirror, Rishi Sunak told the cabinet that interest rates are expected to increase to 2.5% over the next year and warned ministers against borrowing more to fund public spending.
Aaron Strutt, product director at Trinity Financial, says: "Many people are worried about rates going up, so they have been locking into longer-term fixes. If the Bank of England base rate rises to 2.5%, then fixed rates are likely to be a lot more expensive than they are now.
"If you are reasonably sure you will stay in your property, it makes sense to lock into a longer-term fix. If you're on a tracker rate, it is an excellent time to check the market and see which products are available."
Are rates going up at the moment?
Banks have been increasing the price of their mortgages over the last few days, and others are likely to make changes over the coming weeks.
Scottish Widows has announced some of its existing customer rates are rising by 0.75%, while TSB is increasing some ten-year fixes by 0.5%. Some of Halifax's mortgages are also getting more expensive.
Who sets the Bank of England base rate?
The Bank of England base rate is set by the Bank of England's Monetary Policy Committee, and they are separate from the government.
The Monetary Policy Committee (MPC) is made up of nine members – the Governor, the three Deputy Governors for Monetary Policy, Financial Stability and Markets and Banking, its Chief Economist and four external members appointed directly by the Chancellor.
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Excellent service from David. Available. Quick responses. Flexible. My situation wasn’t the easiest and David took...
Excellent service from David. Available. Quick responses. Flexible. My situation wasn’t the easiest and David took the time to double check with banks their conditions prior to get me my agreement in principle. Highly recommended. Mortgage was quick and easy, I was able to focus on the conveyancing part.
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My 7th remortgage experience with Anthony and the Trinity team - they're the best - great advice, products and services.
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Sophie and Liam were absolutely amazing in getting us the best rates, submitting paperwork quickly and answering all the...
Sophie and Liam were absolutely amazing in getting us the best rates, submitting paperwork quickly and answering all the questions we had very quickly, so we always knew where we stood - which is so important when buying a house. We couldn't recommend them enough!
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