Most borrowers protected from rate increase: UK Finance

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.

Recommended

Bank-of-England-BoE-Clock-700x450.jpg

Mortgage industry reacts to BoE base rate rise

The mortgage industry has reacted to the Bank of England’s decision to raise interest rates by 0.25 per cent to 0.75 per cent. The decision was made following a vote by the Monetary Policy Committee at noon today, 2 August, which resulted in a nine to zero vote in favour of a rise. It is […]

Retirement interest-only mortgages… five things you should know

Tom Gurrie offers some key insights into retirement interest-only mortgages. The rules have changedLast month the FCA redefined retirement interest-only mortgages – RIOs – as standard mortgages, not lifetime, to improve access to borrowing for older consumers, including interest-only borrowers facing shortfalls. Expect a boost in the number of these deals once lenders work through […]

Scottish Building Society launches RIO

Scottish Building Society is now offering a retirement interest-only option to its range of mortgage products. This follows Leeds Building Society’s announcement earlier today, a result of the FCA’s decision to reclassify RIO loans as standard mortgages, meaning that all advisers can now offer them. With a minimum loan size of £30,000 and maximum set […]

Retirement - thumbnail

Has Britain really stopped saving?

By Steve Webb, Director of Policy and External Communications Our latest policy paper reveals what the fall in the savings ratio does (and doesn’t) mean In June 2017, the Office for National Statistics published its estimates for the ‘savings ratio’ for the first quarter of 2017. This is essentially a measure of the percentage of […]

Newsletter

News and expert analysis straight to your inbox

Sign up