We look how mortgage rates work, how to prepare for an interest rate rise and more

Mortgage brokers across the country have been poised to find out – are mortgage rates rising? We are relieved to report in April 2023 that the mortgage market has experienced a prolonged period of relative calmness, with rates remaining stable over the past month.

However, when shopping around for the best mortgage rate, we advise borrowers to consider more than just the headline rate of interest when deciding what deal to choose.

To accurately assess the total cost, customers must consider not only the advertised rate but also any accompanying product fees charged by the lender. For larger mortgages, opting for a lower-rate product with a product fee tends to be a more cost-effective choice.

What are mortgage interest rates?

When you borrow money from a lender, you are required to pay back not only the amount borrowed, but also an additional amount known as interest. This is calculated as a percentage of the borrowed amount and is referred to as the interest rate. While lenders are responsible for setting their own interest rates, they may be influenced by or follow the base interest rate established by the Bank of England (BoE).

How do mortgage interest rates work?

There are three different interest rate options when it comes to choosing a mortgage – fixed, variable and tracker:

Fixed rate

With fixed rates mortgage deals, the interest rate remains unchanged for a specified number of years. This ensures that your mortgage repayments will remain constant throughout the fixed rate period, regardless of any fluctuations in the base interest rate established by the Bank of England. Consequently, it becomes easier to plan and manage your budget.

Variable rate

A variable rate mortgage, also referred to as a lender’s Standard Variable Rate (SVR), features an interest rate that is subject to change, leading to potential fluctuations in your mortgage repayments. In contrast to a tracker mortgage, the variable interest rate is set by the lender, who has multiple options when the base rate experiences a change.

Tracker rate

Similar to a variable rate mortgage, a tracker mortgage’s interest rate is subject to change, leading to potential fluctuations in your mortgage repayments. However, the defining characteristic of a tracker mortgage is that the interest rate is set at a fixed amount above or below a specific rate, which it tracks. Typically, this rate is the Bank of England base rate.

Read our blogs Fixed rate or mortgage tracker and Is fixing the best mortgage option for you to find out more.

What is a good interest rate for a mortgage?

There’s no exact number that makes a good interest rate. Determining what constitutes a good interest rate depends on several factors including the amount you’re borrowing and the size of your deposit. Ensuring that you can make the monthly repayments is crucial as it could result in the loss of your home if payments are not made.

For assistance in assessing various mortgages available in the UK market and gaining insight into interest rates, contact us, and we’ll help you compare mortgages. At Greenacre Financial Services we offer independent, whole of market mortgage advice with access to over 100 lenders throughout the UK.

Read our blog on Can I borrow 5 times my salary for a mortgage? to find out which kind of mortgage you can afford.

How to prepare for an interest rate rise

An interest rate rise can have a significant impact on your mortgage repayments, so it is essential to prepare in advance. If the increases are likely to be in the future, then start building up savings so you will be able to afford your mortgage when they hit. If you are worried about how you are going to afford a rate rise – talk to us so we can help you prepare.

How you will be affected by an interest rate rise depends on what mortgage you are on and when your deal comes to an end. Once you know what mortgage you are on, you will be in a better position to find out how this will affect your finances and when you are likely to see this change. We can review your current mortgage deal to understand the potential impact of the rate rise.

We will make sure you are on the best deal. If your current deal is coming to an end, we will look at switching to make sure you are on the best rate. Even if you’ve got some time left on your current deal, and you might have to pay some fees, it could still be worth switching if the savings are worth it. We will advise you fully on the best options for your situation.

Finally, if it will be a few months before an interest rate rise happens, take advantage of the low rate you are currently on and pay extra. There are limits on how much you can overpay and there might also be charges, so you should check with your mortgage provider first.

Wondering How long does it take to get a mortgage? Read our blog to find out…

Our services

Greenacre Financial Services, as a Whole of Market mortgage broker, we can offer expert advice on the different mortgage products available and their associated interest rates, enabling you to choose the best option for your financial situation. We can also provide guidance on fixed-rate mortgages, which can offer protection from potential interest rate rises.

Our team can review your current mortgage deal to assess its potential impact in the event of an interest rate change. We can help you set a budget and evaluate your financial situation to ensure that you can comfortably afford any potential changes in your mortgage payments. By taking the right steps, you can prepare for rates rising and minimise the impact on your finances.

For more information about any of our services, or if you have any questions including are mortgage rates rising, get in touch by calling us on 0203 3939 222.

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Hannah D
Hannah D
07:42 09 Sep 19
I would fully recommend Greg and Greenacre Financial Services. As a first time buyer I was daunted by the process of... finding the right mortgage for me however Greg made the process really simple, clear and quick. He was always available to answer any questions and happy to explain everything. I wouldn’t hesitate in recommending Greenacre FS to my friends and family.read more
Jessica Cohen
Jessica Cohen
19:33 26 Aug 19
We first met with Greg in May for advice as we had adverse credit and irregular pay and didn't think a mortgage was in... our reach. Less than two weeks later Greg had fully arranged a great deal for us on our first mortgage. He was available whenever we needed him, 7 days a week and in the evenings. We cannot thank Greg enough for helping us buy our first home!read more
Seren Fletcher
Seren Fletcher
08:56 24 Aug 19
Would highly recommend Greg and Greenacre Financial Services. Was extremely professional and helpful. Our mortgage... wasn’t straight forward due to my husband being self employed but Greg was very knowledgable and managed to find us a really good mortgage. Looking forward to working with him again in the futureread more
13:24 23 Aug 19
Graham at Greenacre was excellent in helping me get a mortgage for my house purchase. He was always available when... needed, provided an efficient service and was very knowledgeable. Highly recommended!read more
Ian Hatter
Ian Hatter
11:07 16 Aug 19
What can I say, Greg has been absolutely amazing in sorting out a mortgage for me I never thought was possible. It has... meant I have been able to buy a house, a few months ago, I would never have dreamed of being able to buy after talking to high street lenders. He worked exceptionally hard and always kept me updated with every step of the process. Buying a house is extremely stressful, but Greg took all that stress away from me. I cannot recommend Greg enough to anyone looking to buy a property. Thank you so much for your help Greg, it's greatly appreciated.read more
Sean Kelly
Sean Kelly
15:27 30 Jul 19
10/10 EXCEPTIONAL service and result. Highly recommend. Greg and the Greenacre Financial Services team were fast,... knowledgeable, and honest. All the qualities you want and need. Very pleased I was recommended to Greenacre. Customer for life!read more
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