Over the past year base rate has increased from 3.75% to 4.50%, a change of 0.75%. This is bad news for borrowers, with mortgage rates on the up, says Moneyfacts.co.uk.
The best buy charts on Moneyfacts.co.uk show a cross-section of some of the best products on the market and show a comparison of rates available in June 2003 (base rate at 3.75%) compared with June 2004 (base rate at 4.50%). Although base rate has only increased by 0.75%, the average best buy has increased by up to 1.76%.
For example, in June 2003 the average best buy for a fixed rate with no tie-in, was 3.68%. For a £100,000 mortgage over 25 years, monthly repayments would be £510.33. In June 2004, the average best buy for the same type of rate is a massive 1.76% higher at 5.44%. Repayments on this would be £610.51 – an extra £30,054 over the 25-year term.
Emma Butler, Moneyfacts web editor, says: “With speculation of further base rate increases it may be worth people looking into good fixed and capped rate deals sooner rather than later. For those borrowers who are already stretching themselves this may be even more important. For instance, on an interest-only mortgage of £100,000, even just a 0.5% increase in rates would cost over £40 extra a month.”