It’s the third anniversary since the Bank of England base rate dropped and remained at a record low of 0.5 per cent and research by MoneySupermarket has found a quarter of homeowners have benefited from reduced mortgage repayments over this time.

Clare Francis, mortgage spokesperson at MoneySupermarket, said: “Over the last three years, some borrowers have benefited from the low interest rate environment with reduced monthly mortgage repayments. However, with the high cost of living, including bills, food and transport costs, many have been forced to use the ‘extra’ cash from their reduced mortgage repayments to bridge the gap of their shortfalls for essential outgoings.”

The research also found a future base rate rise would have a real impact on homeowners’ finances, with over a third (35 per cent) stating they would be worse off if it were to increase, and a further 26 per cent stating they would have to make cutbacks to their day-to-day spending. On the flip side, some felt they would benefit from a rate rise as they would get a better return on their savings. A base rate rise of just 0.5 per cent would mean a £43 per month jump in mortgage payments for homeowners with a £150,000 variable repayment mortgage, currently paying 4.00%. If the base rate is pushed up by one per cent, then their monthly repayments would leap by £85 a month.

Clare Francis continued: “Whilst base rate is not expected to rise in the immediate future, it is clear borrowers have got used to lower repayments and their finances could be severely impacted should there be any change to the rate.

“And as the recent news that Halifax is hiking its SVR from 3.50% to 3.99% from May illustrates, some borrowers won’t necessarily have to wait for the base rate to rise before their mortgage payments start to climb again”.

“Anyone currently sitting on their lender’s SVR should therefore consider remortgaging now. With base rate expected to remain unchanged for the foreseeable future, some may be willing to stick with a variable rate deal. If this is the case, a tracker is a safer option than a discount because tracker mortgages are directly linked to base rate and changes will mirror the movement of base rate. Discounts on the other hand are linked to the lender’s SVR so there is a risk that the mortgage rate may go up even if base rate remains unchanged”.

“If you are worried about higher mortgage repayments, a fixed rate will give protection against future base rate increases. Five-year fixes are popular at the moment. The risk of going for a shorter-term fix is that the fixed period could end as interest rates are rising so you could find yourself having to remortgage when rates are higher than they are at the moment.”