Borrowers who took-up variable-rate mortgage deals should prepare for increasing monthly repayments due to inflation.
Home owners have enjoyed tracker transactions and low standard variable mortgage rates, which indicates changes to the base rate in the Bank of England, since the rate dropped to 0.5 percent in March last year. However, inflation is feared to have pushed up the base rate.
According to Melanie Bien, director of mortgage broker Savills Private Finance, borrowers should not be alarmed as growth in the economy and fears over unemployment should thwart a rapid rise in rates. However, she said that concerned borrowers who are on variable and tracker loans should seek independent advice. “Borrowers who want security should look at longer-term fixes,” she said.
“If you fix for just two years you may need to remortgage when interest rates are higher.”