Millions of people in the UK can expect to be £1,476 worse off, on average, as the direct result of a fresh interest rate hike.
The Bank of England is expected to increase the base rate from 2.25% to 3%, meaning the the average mortgage holder on the standard variable rate (SVR) could see their payments rise by £1,476 a year.
Sarah Coles, personal finance expert at Hargreaves Lansdown said: "For anyone on a variable rate mortgage – like a standard variable rate or a tracker mortgage – much of this rate rise is likely to be passed swiftly through into your monthly payments."
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If you have a £250,000 mortgage over 25 years, under the new rates, you would see a rise in monthly mortgage payments from £1,520 to £1,643 - so you would need to find another £123 a month.
What a higher interest rate would mean for savers
Ms Coles added: "For savers, any rate rise is unlikely to provide an overnight big bang where rates jump significantly. With the big high street banks stuffed full of lockdown savings, they’re happy to continue offering miserable rates – typically under half a percent. It means it’s up to the smaller, newer and online banks to bump rates up.
"They don’t want a vast amount of new cash, and they don’t want to pay more than they have to for it, so they’re likely to continue nudging rates up a fraction at a time. The rate rise is likely to mean the upwards shuffle continues, rather than providing any particularly dramatic acceleration.
"If you were waiting for a better rate in order to fix, you’re not going to get it overnight after the announcement. It means that anyone playing the wait-and-see game needs a clear understanding of what kind of rate they’re prepared to fix at, how long they’re prepared to wait, and how much interest their cash is missing out on in an easy access account in the interim.”
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