Variable rate mortgages to rise on back of rate hike

15 January 2007
The shock interest rate hike by the Bank of England's monetary policy committee (MPC) yesterday caught many mortgage lenders unawares – but analysts predict the base rate rise will quickly translate into variable rate increases.

Customers with fixed-rate mortgages will be unaffected by the change, but tracker mortgage customers are highly likely to see their rates increase by 0.25 per cent.

"Most lenders will put their rates up by 0.25 per cent but some will go up by more than that," Ray Boulger, senior technical specialist at mortgage broker John Charcol, told the Guardian.

"They will take the opportunity to increase their margins."

After the November interest rate increase, Halifax, Cheltenham & Gloucester and Nationwide all moved to increase SVRs by 0.25 per cent.

Abbey opted for a 0.34 per cent rise in the rate for its standard variable rate (SVR) mortgage.

Conversely, the interest rate rise is "great news for savers", stresses National Savings and Investment's senior savings strategist, Dax Harkins.

Zopa, Saga and M&S Money have all announced that savings accounts customers will profit from the MPC announcement with imminent effect.

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