What does the interest rate rise mean for you as a mortgage holder?

On Thursday 1st November, the Bank of England announced an interest rate rise for the first time in a decade.

Early in September, the money markets weren’t expecting the first Bank of England interest rate rise to occur until late 2018, at the earliest. Just over a week later, and the markets’ view was that there was a near 50% probability of a 0.25% base rate increase by November.

This prediction turned out to be true, and on Thursday 2nd November there was an increase in interest rates from 0.25% to 0.5%.

But what does the rise in UK interest rates mean for the mortgage market?

An increase in interest rates for any borrower inevitably means they may see an increase in repayments. But for mortgage borrowers, will the effects be immediate?

Variable or tracker rate mortgages

According to the Bank of England, 43% of homeowners are on variable or tracker rates. These are the people who will be most affected by the rate rise.

Those on Bank of England base rate tracker mortgage will immediately be affected