UK Finance believes that most borrowers won’t feel any adverse effects from today’s base rate rise to 0.75 per cent.
The trade body reports that this is because 95 per cent of new loans taken out as of May were of the fixed rate variety and that at the end of 2017, more than half of all regulated mortgages outstanding were on a fixed rate deal.
Chief executive Stephen Jones comments: “Lenders will now need to assess the impact of their increased funding costs. Customers with variable rates may see changes in the offers and arrangements available. For those customers and businesses currently paying a fixed rate on their lending, today’s rate rise will not cause any immediate to change to their arrangements.
Director of mortgages Jackie Bennett says: “The majority of borrowers will be protected from any immediate effect from today’s increase.
“There is no single indicator of the cost of funds to lenders. Lenders have individual funding models, with the cost and mix of funding sources varying considerably from lender to lender. As a result, when costing their standard variable rate or reversion rates, lenders are not necessarily led by the Bank of England Base rate so any increase or decrease in the rate may not be passed on to borrowers.
“Rates are still at a historic low and borrowers remain well-placed to get a good deal from the UK’s competitive mortgage market.
“Anyone with concerns about managing their mortgage should contact their lender to discuss the advice and support available,” she adds.