Fixed rate mortgage? Here’s how to save money – SARAH COLES | Express Comment | Comment

And banks will be falling over themselves to pass on the rise to mortgage customers before the ink dries on the Bank of England’s announcement. In fact, Halifax fell over its own shoelaces and accidentally announced its rise before the Bank of England’s decision. If you’re one of the 1.1 million people on a standard variable rate mortgage, or one of the 850,000 with a tracker, your costs will rise.

Someone with a £ 300,000, 25-year, repayment mortgage on the average SVR could see their monthly payments go up by over £ 40 a month.

And while in isolation this doesn’t sound like an impossible stretch, the steady ratcheting up of rates since December will be taking a toll.

The combined impact of four rises in five months is catching up with us.

The Bank of England predicts the spending power of our income will fall 1.75 percent during the year, leaving us all struggling, and life is going to get even harder for borrowers.

Three quarters of mortgage holders are protected by a fixed rate mortgage, but while they’ll be reaping the benefits during the fixed period, it means they’ll feel the impact in one fell swoop when their mortgage expires.

The Bank’s efforts to bring in rates gradually and smoothly will be no use to anyone who re-mortgages and sees their rates jump overnight. 1.5 million of these fixed rates are set to expire this year.

If you have six months or less left on your current mortgage deal, you can apply for a re-mortgage rate today, and lock in a deal in case rates rise again.

If you have longer until your fix comes to an end, there’s time to plan for how you’ll cover the extra costs. Ideally, you’ll be able to track down costs to cut elsewhere in your budget, to free up more cash for your mortgage.

Meanwhile, credit card costs and new loans will continue to creep up, so anyone borrowing to stay on top of rising prices will pay an even higher price for it.

For savers, on paper, rate rises are great news.

Unfortunately, someone needs to let the high street banks know, because they’re dragging their feet in passing these rates on.

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