High Interest Rate Mortgage Calculator: How Much Will It Cost You?

The Bank of England raises interest rates and this drives up mortgage rates, and our calculator lets you see what that might cost you.

You can see how much more you’ll pay on your mortgage if the lender changes the rate you’re paying (or how much you’ll save if rates drop).

The calculator allows you to use your current mortgage rate and see how different levels of rate appreciation will increase your interest and monthly payments.

Enter a number for the size of the price hike, for example, 0.25, 0.50. Or 0.75, or a negative value (eg -0.25) to lower the interest rate.

> Check out the best live mortgage rates you can apply for with our mortgage finder

What happens to interest rates

After more than a decade of post-financial crisis stagnation, interest rates are rising rapidly.

The Bank of England’s base rate, formally known as the bank rate, rose from 0.1 percent last December to 3 percent now, and is expected to continue to rise.

The latest hike came on Thursday, November 3, when the Bank’s interest rate setters added another 0.75 percentage point to bring the base rate up to 3 percent.

It comes as the Bank of England’s Monetary Policy Committee – the group of economists who vote on the base rate – looks to try to keep inflation under control.

The idea is that by raising the base rate, it raises the cost of borrowing and reduces the demand for it from consumers, households, and businesses, slowing the economy.

In theory, this should eventually lower inflation, which currently exceeds the Bank of England’s 2 percent target of 10.1 percent.

The Bank of England has raised interest rates significantly since the hikes began in December 2021

The Bank of England has raised interest rates significantly since the hikes began in December 2021

Prime rate versus mortgage rates

When the Bank of England changes the base rate, some mortgage rates will move, but not all.

Fixed deals will remain at the same level until they expire, base rate trackers will move the same amount as a bank shift, and variable standard rates or other associated deals will move an amount set by the lender.

The cost of fixed-rate mortgages has risen dramatically over the past year, spurred by the Bank of England’s hike in rates and exacerbated by the fallout from Liz Truss and Kwasi Kwarteng’s poorly received mini budget.

Debt-financed tax cuts in this – since reversed – have created financial turmoil, rising government borrowing costs, a vicious cycle of selling pension fund bonds, and expectation rates will have to go up even more.

Government borrowing costs, as measured by gold revenues, have since fallen to pre-mini-budget levels after the Bank of England intervened, before Quarting and then Truss resigned and Jeremy Hunt took over as chancellor and Rishi Sunak as prime minister, but reformed. Mortgage rates are still high.

The two-year flat rate average is currently at 6.47 percent and the five-year flat rate average is at 6.32 percent. In November 2021, the averages were 2.29 percent and 2.59 percent, respectively.

What to do if you need a mortgage

Borrowers who need to find a mortgage because their existing fixed-rate deal is coming to an end, or because they’ve agreed to buy a home, are urged to act but not panic..

Banks and building societies are still lending and mortgages are still being accepted with applications accepted.

However, rates change quickly, and there is no guarantee that deals will stick and won’t be replaced by mortgages that charge higher rates.

This is Money’s best mortgage rate calculator powered by L&C that can show you deals that match the value of your mortgage and property.

What if I need to re-travel?

Borrowers should compare rates, talk to a mortgage broker, and be prepared to work to secure a rate.

Anyone with a fixed-rate deal that expires within the next six to nine months should consider how much a remortgage will cost now — and consider a new deal.

Most mortgage deals allow a fee to be added to the loan and then only charged when you take it out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I’m buying a house?

Those who have agreed to buy homes should also aim to lock in prices as early as possible, so they know exactly what their monthly payments will be.

Homebuyers should beware of overexerting themselves and be prepared for the possibility of home prices falling from their current high levels, due to high mortgage rates limiting people’s ability to borrow.

How to compare mortgage costs

The best way to compare mortgage costs and find the right deal for you is to talk to a good broker.

You can use our best mortgage rates calculator to show matching deals for your home value, mortgage size, term needs and flat rates.

Be aware that rates can change quickly, so the advice is that if you need a mortgage to compare rates then speak to a broker as soon as possible, so they can help you find the right mortgage for you.

> Check out the best fixed rate mortgages you can apply for

The latest news on interest rates and mortgages

Read our regularly updated guide to find out more: What’s next for mortgage rates and should you fix it?

Our Home and Mortgages section also contains the latest articles on mortgage rates.

Savers benefit from higher rates – check out the best savings rates in our independent tables.

Be the first to know about Bank of England rate changes – Follow This is Money on Twitter. Or get price forecasts for weekly updates and other big issues in the This is Money newsletter – sign up using the box below.

We also discuss the latest price action, best mortgage rates, savings and more on our weekly podcast. Visit the This is Money Podcasts channel or listen to Apple Podcasts, Spotify, Audioboom, YouTube and more.

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