Mortgage interest rate spike – what it means for you

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Halifax, Virgin Money and Skipton are just some of those to withdraw products, with plenty more following. Markets expect bank rates to hit 6 percent in the spring, which could push mortgage rates to 9 percent. 

It only seems like yesterday when it was possible to get a mortgage for less than 1 percent, but those days are now gone for good. 

Each percentage increase adds £2,000 a year to a £200,000 mortgage, or £167 a month. 

If mortgage rates jump by 4 percent, that’s an extra £667 a month, or a staggering £8,004 a year. No wonder homeowners are desperate, especially with other costs shooting up. 

The obvious step is to find a lender still keen to lend and lock into the cheapest rate. 

However, first check if you will pay early redemption charges on your existing mortgage, as this could wipe out some savings. 

Experts usually advise against switching mid-deal, but that may be obsolete with rates set to rocket. 

If your fix is due to expire in the next few months, booking ahead could allow you to seamlessly move. 

Locking in for longer gives you more security but costs more and there are hefty penalties if you want to bail. 

Check your long-term fix is “portable” if buying a new home. 

Those borrowing larger sums may find paying a high product fee worth it to get a lower rate. The reverse applies to those with smaller mortgages. 

There is a chance that today’s panic has been overdone – once inflation comes under control, mortgage rates may start falling almost as fast as they are rising today. These days anything can happen. 

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