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Rising Anxiety: What to do about the interest rates increase

Satnam Sidhu - Mortgage Expert 4th August 2022

Updated 4th August 2022

Why have interest rates gone up?

The Bank of England has set a new interest rate of 1.75% - the sixth rise in eight months. They’ve done this because inflation is the highest it’s been for 40 years.

What is inflation? 

Simply put, inflation is when the general price of goods and services goes up. When these prices rise, it means your money buys less. 

Inflation can happen when there’s not enough products or services to meet the demand for them, when the cost of producing these products or services rises, or when workers need higher wages to keep up with their increasing living costs. Inflation isn’t something that’s directly controlled, but interest rates are. 

Why do interest rates change?

When inflation happens, a country’s central bank responds by increasing its interest rate. They do this to encourage people not to borrow or spend, in the hope that they will save their money (because they can get more interest on their savings). The idea is that with fewer people spending their cash, the economy slows down a bit and inflation goes down again. 

The pandemic and the war in Ukraine has caused inflation in the UK to really grow, and many workers need higher wages to cover their growing living costs. There’s also shortages of manufacturing materials and skilled workers in some industries which is pushing up prices. The prices of everyday items have risen quickly, with wages lagging behind. On top of this, higher energy bills and national insurance hikes have pushed inflation right up - so the Bank of England has taken action to try and get things back to normal. 

What does this all mean in the real world?

Interest rates going up makes borrowing more expensive. It can have a knock on effect depending on your situation.

If you’re a first time buyer

If you’re a first time buyer, you might be worried about how the interest rate rise will affect your ability to get on the property ladder. If you’re paying interest on any credit card debts, personal loans or store cards then you might find your monthly payments increase, which could affect how much you can borrow. 

Don’t give up hope though. It could be a good time to prepare and get mortgage-ready, or if you need a mortgage soon, certain lenders offer free valuations and no arrangement fees which can cut down on upfront costs. Getting advice from an expert will help your chances of finding the right lender and getting the most competitive mortgage deals. 

Talking about how inflation might affect house prices, Rightmove’s Director of Property Data said: 

“We’ve seen a real desire from both sellers and buyers to take action and move at the start of this year, and this is likely to outweigh the impact of an interest rate rise on house prices, at least in the short term.”

If you’re a homeowner

If you’re currently on a variable/tracker mortgage or are coming to the end of your fixed rate deal, it might be time to think about remortgaging to get a more competitive deal. With energy prices on the rise, bringing down your mortgage payment is a good way to free up some cash each month, as it’s usually your biggest outgoing. 

You can use this as an opportunity to assess your financial situation and weigh up your options i.e. refinancing, consolidating debts, or extending your mortgage term. Some lenders are also offering free legal services and cashback incentives for remortgage customers. 

Before getting started, it’s best to speak to a specialist. Our Mortgage Experts can look at your options and find a remortgage solution. 

Think carefully before securing any other debts against your home - it could be repossessed if you don’t keep up your repayments.

How to get help if you’re struggling

If you're feeling the squeeze, there's help available: 

Energy bills

Anyone in Council Tax bands A-D will get a one-off £150 rebate from the government from April 2022 (England only), while all households will get £400 off their energy bills in October 2022.

If you want to make your home more energy efficient, tax has been scrapped on energy-saving materials such as solar panels, insulation, and heat pumps. Though this isn't yet available in Northern Ireland.

The government's Household Support Fund has been doubled, and local authorities will receive funding to help the most vulnerable people with their energy bills. A windfall tax has also been introduced, raising £5 billion for the government's energy support package.

The Citizens Advice Bureau has a detailed list of grants for energy bills such as the Warm Home Discount and Winter Fuel Payment. You can also chat to your water supplier - most can offer some sort of help. 


Fuel duty has been cut by 5p a litre in an attempt to ease the pinch at the pumps.


If you receive welfare benefits, you'll get a one-off £650 'cost of living payment' directly into your bank account. The National Insurance threshold has also been raised by £3,000 to ease the rise in contributions which came into effect in April 2022.

Universal credit has replaced housing benefit, so you could apply if you need help with your rent. If you already claim benefits but don’t get housing costs covered, you could be eligible for a Discretionary Housing Payment through your local council. 

It can be hard to reach out in difficult times. If your financial situation is affecting you, it could be worth talking to a charity such as Mind. They do fantastic work supporting people dealing with mental health issues caused by money worries. That’s why we give them a donation every time a customer’s mortgage completes. 

How we can help

We can’t fix the problem. But we can give you advice if you’re feeling stuck. If you're thinking about refinancing to free up cash, or considering buying, we can look at your options.

We’re experts in mortgages for bad credit, self-employed, and the tricky stuff. Difficult is what we do. So whether you’re a first time buyer who’s panicking about your options, or a homeowner thinking about remortgaging, let’s chat. 

Our Mortgage Experts have seen it all and aren’t judgemental. Make an enquiry to get started. It only takes 60 seconds and doesn’t affect your credit score.


Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.

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