The fallout from the Chancellor's mini-Budget this week has meant forecasts are heavily showing a 6 percent base interest rate within 12 months.
Use the below calculator to see how any rise in the BOE base rate will affect the monthly payment you make on your mortgage.
The market response to the tax-cutting budget combined with the lower than expected rise in BOE base rates last week led to an outflow of investment in UK pound sterling. This causes immediate further pressure on the cost of living crisis as imports become more expensive.
The Bank of England responded by stating they are monitoring the situation but rises in interest rates to levels far more than the 3 percent forecast are now a reality - required to shore up the pound for investors and to help ease import inflation.
The slip in the value of the pound was exacerbated by the very strong dollar at the moment due partly due to the States increasing their interest rates by a sharper amount than us here in the UK.
Countering the increased cost of imports due to a falling pound value with higher interest rates means mortgages will be hit hard and this is worrysome for the nearly 11 million of homes with outstanding mortgages - a third of all property. Particularly for those on variable, discounted and tracker mortgages, as well as those with fixed deals coming to an end in the near to medium term.
Three quarters of those 11 million mortgages are fixed term contracts but as over 300,000 mortgage deals come to an end each quarter people will be hit with rates multitudes higher than their existing deal - possibly adding hundreds of pounds a month in monthly outgoings to already constrained finances.
Other issues are based on house prices and the effect rising interest rates will bear. For example, the bank of england has just updated its stress test for banks and is using a prediction of 31 percent house price falls in one year. This is a worst-case scenario but a falling housing market will make it very hard for those with little equity/high loan to value remortgages to find another fixed deal whilst interest rates rise.
