Biggest BoE rate hike in 27 years set to shock 2m variable-rate mortgage customers

For immediate release

Ahead of Thursday’s Bank of England interest rate announcement, TotallyMoney, the credit app which helps everyone move their finances forward, and Moneycomms calculate the impact on tracker and variable rate mortgages:

For the average UK property costing £270,708, with a 75% LTV, a 0.5% hike means mortgage repayments will cost £196 per month more than in November last year*
If the BoE raises the rate by “just” 0.25%, the same mortgage repayments will have risen by £144 per month since November 2021*
With 850,000 properties on tracker mortgages and 1.1 million on Standard Variable Rates**, one in four mortgage (c. 20 million) customers will have no protection against the interest rate hike
Meanwhile, 33% borrowers with a fixed rate deal are heading for a payment shock when their current offer expires in the next two years†. They will need to find a new deal at a higher rate, or face being placed on lender’s standard variable rate (SVR)
TotallyMoney’s whitepaper with PwC, ‘Overlooked and financially under-served’ found 16 million adults wouldn’t be able to afford an unexpected payment of £300 in the next 12 months‡

View and download full Ready Reckoner research tables here.

Alastair Douglas, CEO of TotallyMoney comments:

“The latest interest rate hike will serve as yet another blow to the two million mortgage borrowers without a fixed-rate deal. Repayments for the average home are set to rise by £52, an increase of £196 per month since last autumn.

“What’s more, this isn’t an isolated problem. With everything ranging from phone bills to food feeding inflation, costs will continue to soar over the upcoming months, increasing pressure on household finances for millions.

“The one in three homeowners whose fixed-rate deal is soon coming to an end should start planning ahead. Not only is the SVB rising, but new deals are also getting more expensive. Either way, you’re likely to be paying more, so it’s worth looking at your options in advance.

“At TotallyMoney, we’re on a mission to help everyone move their finances forward. For many, owning a home is a key step in this journey. Lenders will usually refer to the information on one's credit file to assess their ability to manage mortgage repayments, and the best deals are often reserved for those with the best scores.

“That’s why we provide people with their free live credit report, personalised notifications on what might be holding them back, and tailored tips to improve their score, helping them gain financial momentum along the way.”

Andrew Hagger, Personal Finance Expert, Moneycomms.co.uk added:

”The MPC decision to hike rates for the sixth time since last December will make borrowers wince at the thought of yet higher monthly mortgage costs.

“Customers on a fixed rate will avoid immediate financial pain, but for many a triple digit increase is inevitable next time their mortgage deal comes up for renewal.”

#ENDS

Sources

* Moneycomms research commissioned by TotallyMoney July 2022

** UK Finance

† Bank of England

‡ Overlooked and financially under-served TotallyMoney x PwC whitepaper

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About TotallyMoney

With a focus on the one in three UK adults financially under-served by the financial services industry, TotallyMoney is the credit app on a mission to help everyone move their finances forward.

TotallyMoney believes people’s financial data should work for them, and not against them and with more than four million customers, they provide the UK’s only free, live credit score and report.

Its service helps customers understand their financial position and provides personalised recommendations so they can start creating financial momentum. TotallyMoney also works closely with leading lenders, to ensure eligible customers are matched with the right products, underpinned by its robust data, product and tech capabilities.

TotallyMoney is regulated by the Financial Conduct Authority (FCA).