The Bank of England yesterday increased its rate by one quarter of a per cent to 0.75%. This is the highest interest rate since March 2009 and only the second increase in 10 years.
As always this increase is good for savers but not so good for borrowers. Variable and tracker rate mortgages will undoubtedly increase and therefore make it more expensive to borrow money.
Potentially it could slow the property market down.
Borrowers who have been offered mortgages may find their mortgage offer withdrawn as their income may then fail to meet the lender’s criteria for affordability of the mortgage at the increased rate. Borrowers should contact their lender to ascertain at the earliest possible date whether the increase in the rate will affect the mortgage offer which may already have been received.
If as a buyer you are close to exchanging contracts or you have already exchanged contracts and awaiting completion you should contact your lender immediately to obtain confirmation that the mortgage offer will not be withdrawn because of the increase. Once you have exchanged contracts you are committed to complete on a specific date.
Lenders are entitled to withdraw mortgage offers for any reason and at any time up until completion.
If your lender withdraws your mortgage offer after you have exchanged contracts so that you cannot complete the purchase, you are still bound by the contract and if you do not complete you could lose your deposit and more.
Read more about the rate increase here