Interest rate rise by the Bank of England
Britain’s economy is now in recession, the Bank of England has said, as it raised interest rates to tackle the worst bout of inflation for 40 years.
The Monetary Policy Committee of the Bank of England has agreed to raise interest rates from 1.75 percent to 2.25 percent since the rate’s latest increase in August. This has been the highest rate since 2008. The base rate has increased for the seventh consecutive time, and more rises are anticipated later in the year. Several analysts believe the base rate may reach a high of 3% by the end of 2022.
“The majority of individuals have fixed-rate mortgages, but as interest rates continue to rise, there is a growing concern for those whose terms are about to expire. Since rates have likely doubled in certain situations since they last locked in, those who decide to fix again may discover that their new monthly mortgage payments are greater even after paying down some of their debt and moving into a lower LTV bracket. They must now choose between taking another fixed agreement for a little more predictability in their expenses or switching to a tracker mortgage in the hopes that interest rates would drop again shortly,” Tim Bannister, Rightmove’s analyst, says.
Tomorrow, Kwasi Kwarteng, the chancellor, will outline the specifics of the government’s energy price guarantee as well as a package of comprehensive tax reductions that will cost well over £150 billion in order to spark economic growth and protect consumers from skyrocketing costs.
How does this affect your mortgage?
The base rate won’t affect your mortgage repayments on a fixed rate mortgage, however, if you are on a variable rate mortgage, your repayments are likely to change.
If you are thinking of selling during these changes or you would like to speak to an agent about buying or selling a property please get in touch with us.
We also work with recommended financial advisors and cover these topics in the Cardiff Landlord Forum.