Some mortgage deals may become cheaper as today's interest rate rise by the Bank of England did not go as far as some had feared, brokers have said.
The central bank hiked rates by 0.75 percentage points today (November 3), to 3 per cent, its biggest single increase in 33 years.
But brokers said the hike had already been priced into many fixed rate deals, and some deals had even higher rates priced in.
"As absurd as it sounds, you might find that more mortgage rates will reduce as the base rate has not increased as high as some feared," said Ashley Thomas, director of London-based mortgage broker, Magni Finance.
Paul Holland, mortgage broker at Chatham-based Henchurch Lane Financial Services, agreed a 3 per cent base rate would have been priced into many fixed rate deals over the past month and said increased confidence in the UK economy under prime minister Rishi Sunak could further benefit borrowers.
He said: "[Fixed rates] tend to be based on swap rates, which if anything, are now coming down as some confidence is restored to the market following the U-turn on everything Kwasi and Truss did.
"Tracker rates and variable rates will of course go up as a result of Thursday's rate rise, but there is such a huge gap between the bank rate and fixed rates that we shouldn't see any further hikes in the short term."
But he cautioned that anyone exiting their mortgage now and in the foreseeable future would be in for a shock in comparison to the rates the were used to.
He said his firm was currently dealing with clients whose mortgages were going up by £500-£1,000 per month.
"This is making the energy crisis seem like a drop in the ocean and there will be a lot of people defaulting on their mortgages or selling their houses in the medium term."
The base rate of 3 per cent is not high by historic standards. Though many borrowers would have got used to ultra low rates following the financial crash of 2007-08.
Austyn Johnson, founder of Colchester-based Mortgages for Actors, said people whose fixed rate ends in the next few months would be hit the worst and some could see their monthly payments double.
He also warned about borrowers in the buy to let space.
"People on variable rates, especially portfolio landlords, will need to get the ball rolling ASAP as they will have increasing costs across their whole portfolio," he said.
"Even the people in the middle of a long fix will now be limited in their flexibility. If they suddenly needed to get out of the fix, they will be hit with a huge hike in rate."
Nicky Stevenson, managing director at national estate agent Fine & Country, agreed the rental market would face challenges as landlords have typically relied on interest-only loans to finance their acquisitions.
