With a large number of Britons struggling with debt problems, the news that the Bank of England might well increase its base interest rate in 2015 was certainly not welcomed by anyone.
Homeowners who are on the Standard Variable Rate (SVR) offered by their lender or are approaching the end of their current deal can save themselves a lot of money if they take action soon, says the comparison website MoneySuperMarket.
The site’s Dan Plant commented that homeowners should reconsider the options they have at their disposal as far as mortgages are concerned before the Bank of England decides to hike its base rate.
He added: “The minute the base rate rises, and possibly even before, lenders will increase their rates as well, resulting in an increase in mortgage payments.”
Plant went on to say that people who want to control their monthly expenses have no better option than to opt for a fixed interest rate, which will avoid future shocks and protect them against rate increases.
The site did some research and came to the conclusion that borrowers who are currently paying 4.99% interest on an SVR loan could save as much as £4,749 if they changed over to the best deal that is currently available in the UK: a 2-year fixed rate mortgage offered by HSBC at only 1.49% per year, with a £1,999 arrangement fee.
Someone who currently pays 3.99% would save up to £2,609 over a 2-year period with the same deal. If the base rate increases during that time, he or she would save even more.