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Rising Interest Rates

November 4, 2021

With interest rates falling below 1% the idea of them rising has not come as a shock for those looking to buy, but is it something to worry about and how will it affect the housing market? Charlie O’Hara, Mortgage and Protection Adviser at Mortgage Solutions of Wakefield, talks us through the latest news around rising interest rates, and what it means for home owners and those looking to buy.

It is happening and likely to continue but don’t panic!  Let’s start by considering what rising interest rates might look like…. The Bank of England will keep tight control over this to ‘soften the blow’ and it is thought that we are only likely to see an increase of 0.25% over the next few months, up to potentially 1% at around the 12-month mark.

How will interest rate rises affect mortgage payments?

Looking at a loan of £150,000 being paid back over 25 years, fixed on a rate of 1.2% the monthly payments would be £580.  Increase this to 1.45% and the payments would be £596 per month. Take this to 2.2% and we have £650 per month.

But remember, fixing into a rate means nothing changes until the fixed period ends, which is usually after 2, 3 or 5 years.

Of course, anybody looking to take on a mortgage should make sure they have enough disposable income to ensure the mortgage is affordable to them. While still allowing them to enjoy life and the prospect of your outgoings increasing should always be considered when seeking advice.   It also important to remember that these new, novelty low rates are just that – a novelty. And people have bought their first home, moved home, or purchased investments with rates that have been much higher in the past and they will continue to do so in future.

How could interest rate rises affect the housing market?

2020/2021 has been incredibly busy for Estate Agents across the board and this falls to supply and demand. The break in stamp duty did aid in increasing the number of home movers but ultimately there are still more buyers than they are houses available. So although it may slow down, it is unlikely that interest rates will have a major impact.

What should you do if you are concerned about the rises in interest rates?

If as a buyer you still have some nerves about rising interest rates, in some cases when issuing your mortgage agreement, we can look to secure you a mortgage product for the next 28 days. This gives you time to find your home without even thinking about the possible 0.25% looming interest rate rise.

Get in touch to arrange a no obligation, confidential consultation with one of our mortgage experts.

Follow the link to BOOK A CONSULTATION or call 01924 339572.


Mortgage Solutions of Wakefield an appointed representative of TenetConnect Services Limited, which is authorised and regulated by the Financial Conduct Authority (FCA).  TenetConnect Services Limited is entered on the Financial Services Register ( under reference 150643. 

A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.