Property – what do base rate rises mean for homeowners?

Jul 6, 2022

Over recent months the Bank of England’s interest rate has been increasing. In May, the government announced that the Bank of England’s base interest rate would rise from 0.5% to 1% and then on 19 June they further increased the interest rate to 1.25% – the highest percentage the country has seen since March 2009. Whilst this means that interest may accrue at a higher rate in a savings account, this also means that mortgage payments may be slightly higher. Below, we visit what this practically means for homeowners.

Will mortgage payments increase?

If you are a homeowner with a mortgage over your property, you may likely have a fixed rate mortgage – meaning that your lender has agreed to cap your interest rate at a set percentage. This would have been granted for a fixed period of time (typically anywhere between 2 and 10 years). If you are under a fixed rate scheme and are within the period of time for this scheme, your monthly payments and interest rates will remain unaffected until your fixed period comes to an end. The Bank of England’ increase in its base rate will therefore not be applicable to you. However, if you do not have a fixed rate mortgage your mortgage payments will be increasing.

How much will payments increase by?

Should you fall into the category whereby your mortgage payment will be increasing as you are not party to a fixed rate mortgage scheme, you will receive notice in writing from your lender following every interest rate change with confirmation as to how much your mortgage payment has increased by and when this change will take effect from. It is difficult to know exactly how much each individual’s mortgage payments will increase by as a number of factors will affect the amount to be repaid – whether the mortgage is on an interest only or repayment basis, along with the length of time the mortgage has been taken out for (i.e. 5 years or 25 years). If you have any further concerns in this regard, your lender should be able to assist with any specific queries.

If you are in the process of buying a property

If you are in the process of buying a property and currently have a mortgage offer, you should consult with your mortgage lender/broker to check that your mortgage offer remains valid on the terms agreed. Lenders have the right to withdraw their offer at any time should circumstances change. This means that should a lender feel you will be unable to keep up with monthly payments due to the increase in interest rates, they will withdraw their offer to you.

Whilst we are not qualified to advise you of the type of mortgage which would suit your circumstances best, we are more than happy to assist with any legal queries which you may have. As a part of the service which we offer, we will arrange to prepare an extensive report for you on the terms of your mortgage offer. For any legal queries, please contact us at our residential conveyancing department who will be able to assist you.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to your own particular matter before action is taken.
Samantha Laker

Samantha Laker

Chartered Legal Executive, Residential Property

t: 01276 854 661
e: samantha.laker@herrington-carmichael.com

Sign up

Enter your email address for legal updates on Corporate and Commercial law.

Please see our privacy policy regarding use of your data.

Contact us

Request a video call, phone call or a meeting in person with one of our Corporate & Commercial experts...

    Latest Articles



    The Legal Room UK Podcast features a diverse range of specialists offering expertise on a variety of topics.
    You can Subscribe on whatever podcast platform you use.



    What is Adverse Possession?

    What is Adverse Possession?

    Adverse possession is a legal principle by which an individual who is not the legal owner of land can become the legal owner by being in possession...

    Top Legal Insights


    Contract Law

    Material Breach of Contract

    What is a ‘material’ breach of contract by a party to a commercial contract? This is a critical issue regularly considered by the courts. What constitutes a material breach and what are the remedies?

    Property Law

    Commercial Lease: The Financial impact on Landlord and Tenant

    Coronavirus (COVID-19) and the restrictions now in place to control its spread, are having a significant effect on many business sectors.

    Divorce and Family Law

    Divorce in Lockdown: Can I get some discreet legal advice?

    We have spoken to clients who are unfortunately experiencing some family issues, and would like to obtain expert legal advice, yet don’t know how...

    Land & Property Dispute

    Restrictive Covenants – The Price of Modification

    Having identified that your land is burdened by a restrictive covenant and for the purposes of this article the covenant in question will be that only one residential building can be erected on the land. What do you do next?

    Wills, Trusts and Probate

    Why is having a will so important?

    It is entirely up to you if and when you want to create a Will, but it is important to be aware of the consequences of not having a Will.

    Award winning legal advice

    Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2023’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023’. Herrington Carmichael has offices in London, Camberley, Reading, Ascot and Wokingham. 

    Building 2  Watchmoor Park, Riverside Way, Camberley, Surrey  GU15 3YL
    +44 (0)1276 686 222

    Reading (Appointment only)
    The Abbey, Abbey Gardens, Abbey Street, Reading RG1 3BA
    +44 (0)1276 686 222

    Ascot (Appointment only)
    102, Berkshire House, 39-51 High Street, Ascot, Berkshire SL5 7HY
    +44 (0)1344 623388

    London (Appointment only)
    60 St Martins Lane, Covent Garden, London WC2N 4JS
    +44 (0)203 326 0317

    Email: info@herrington-carmichael.com

    Our Services

    Corporate Lawyers
    Commercial Lawyers
    Commercial Property Lawyers
    Conveyancing Solicitors
    Dispute Resolution Lawyers
    Divorce & Family Lawyers
    Employment Lawyers
    Immigration Law Services
    Private Wealth & Inheritance Lawyers
    Startups & New Business Lawyers

    © 2022 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.

    Herrington Carmichael is authorised and regulated by the Solicitors Regulation Authority with registration number 446245.

    Pay Online

    Privacy Policy   |   Legal Notices, T&Cs, Complaints Resolution   |   Cookies 
    Client Feedback   |  Diversity Data