How far will interest rates rise today?

Agents and property professionals will be keeping an eye on Threadneedle Street in London today, with the Bank of England expecting to raise interest rates for the fourteenth consecutive month.

Analysts are expecting a further 0.25 basis point rise to 5.25%, potentially pushing up borrowing costs on mortgages and hitting already waning buyer demand.

Paula Higgins, chief executive of the HomeOwners Alliance, said she hopes the latest rise isn’t as punitive as previous hikes, adding that those on out-of-contract standard variable rates (SVR) should be protected.

She said: “Fingers crossed that a less aggressive rate rise will fuel better mortgage rates being made available to homeowners needing to remortgage. 

“This trend has already started following better-than-expected inflation figures for June which led to some lenders reducing their fixed rate mortgages.”

Higgins said some homeowners are adopting a ‘wait and see’ approach when it comes to remortgaging, which may mean falling onto a pricey SVR.

She added: “More lenders are charging in excess of 8 and 9% so we urge mortgage holders to check their mortgage deal to ensure they’re not potentially paying thousands of pounds a year more than necessary.  

“If they're on the SVR they need to switch quickly. If their current mortgage term comes to an end in six months, start looking now to secure a rate and avoid defaulting onto the lender's SVR. 
“Let's not forget the mortgage prisoners who are trapped on SVR rates set by the lender through no fault of their own. For instance they may have taken out their mortgage before the affordability assessments were introduced even though they have kept up their payments. 

"In light of the FCA's Consumer Duty published this week, and in particular the commitment that financial service providers will "...offer products and services to provide fair value. This should mean you won’t be ripped off..." we hope the FCA will challenge this situation next.:

Not only are the standard variable rates punitive, they are also completely inconsistent between lenders, making it harder for consumers to track, Higgins said, adding: “Lenders should be required to cap their SVR rates, for example 2% above interest rates, so that homeowners aren't taken advantage of.”