"With more rate rises potentially on the horizon, those nearing or beyond the end of their initial mortgage term should be thinking about switching to a more competitive deal."
If the Monetary Policy Committee announces a 0.25% rate rise on 2nd November, Trussle says most UK lenders will pass the full increase onto their customers within a month.
When the MPC cut rates from 0.5% to 0.25% in August, Trussle found that 53% of lenders dropped their rates in line with the Bank of England within a month of the rate change, including four of the 'Big Six'.
In anticipation of a rate rise next month, more than 20 lenders have already raised their rates, several by a full 0.25%.
If rates rise by 0.25%, Trussle's data shows that the average variable rate borrower on a repayment loan would see their monthly payment rise by £16.56. On an annual basis, these borrowers will see their mortgage payments increase by £198, or £990 million across the UK.
There are currently five million UK borrowers on variable rate products, three million of which have lapsed from a fixed rate onto their lender's SVR.
Those on a variable rate in London, where the average outstanding mortgage value is around £243,000, will be hit hardest by a rate rise. A London-based borrower with 20 years left on their mortgage, currently paying an interest rate of 2.25%, would see annual charges increase by £336.
Ishaan Malhi, CEO and founder of Trussle, said: “It’s looking ever more likely that the Bank of England will raise interest rates, either in November or December. This will impact anyone on a variable rate mortgage. While the increase is only likely to be small at first, borrowers on variable rate deals should consider how they’ll cover the extra cost, especially those on a tight budget or with a large outstanding mortgage.
“With more rate rises potentially on the horizon, those nearing or beyond the end of their initial mortgage term should be thinking about switching to a more competitive deal. Because of the perceived complexity of getting a new mortgage, many people tend to this put this task off. As a result, a quarter of mortgage borrowers in the UK have ended up on their lender’s Standard Variable Rate, paying far too much interest. The process of switching has never been easier than it is now, so we urge borrowers to take action sooner rather than later.”
