Variable-rate borrowers feel Thursday’s rise as savers are offered 5.3%
Around 1.3 million households on variable-rate mortgages are the first to pay for the Bank of England’s quarter-point rise to 4%, while one borrower coming off a 1.4% five-year fix faces paying about £200 a month more at the best two-year rate of 5.69%. Nationwide, by contrast, is offering members a 30-month bond at 5.3%, which it calls market-leading, on up to £10,000. StepChange says requests for debt help are up 20% this year.
Most mortgage holders are insulated for now: 87% of outstanding home loans are fixed, and only about 510,000, or 6%, are trackers that move immediately. But the pain is concentrated. A tiler in Halifax on a £45,000 household income sees repayments rise “roughly £45”; a Shropshire paramedic with £52,000 of debt is paying £760 for his mortgage and some £300 a month to creditors; a couple near Ipswich who fixed at 1.4% in January 2022 found 5.69% the best refix available. The governor said Thursday’s move “shouldn’t be seen as the first in an inevitable long sequence of hikes”. For savers the arithmetic runs the other way: Nationwide’s bond, open to its 19 million members who held a qualifying account by 2 November, pays £1,381 on £10,000 over the term, and some easy-access accounts already pay close to 5%. Flagstone’s Katie Horne cautions that a single quarter-point rise “isn’t expected to move fixed rates much further”. The squeeze tightens in January, when the Ofgem price cap rises almost 25% to about £2,150, against which 20 million households will get the £100 energy payment. Watch whether lenders reprice fixes before the Bank’s December meeting.