The Bank of England’s Monetary Policy Committee have, today, raised the Base Rate of Interest by 0.25%, to 0.5%. This is the second increase in a short time and has been implemented in an attempt to slow the rate of inflation, which is currently running at 5.4%, way above the Government’s 2% target. There are many causes for this inflation figure, including the increased cost of utilities, as well as general issues in the supply of goods and services pushing up prices in many areas. It remains to be seen whether this inflation rate reduces over the remainder of 2022, but there is strong evidence that a further interest rate increase may happen in the coming months. I don’t believe rates will move back to the levels they were at historically, but maybe somewhere between 1% & 1.5% may happen later this year.
This interest rate increase won’t have an immediate effect on your mortgage if you are currently on a fixed rate deal but will mean an increase in payments if you are on a variable rate mortgage, such as a tracker rate. Mortgage lenders will now be looking at the rates they are offering to new borrowers and, although these deals are not necessarily linked to the Base Rate, may well start to increase the rate of the mortgage deals on offer. We have already seen some lenders doing this over the last few days. Conducting a review on your mortgage is a very good idea at the moment to ensure you have the best possible mortgage in place for your personal circumstances.
As always, our team is always on hand to answer any questions you may have. Please email us at office@barlow-irvin.co.uk or call us on 01204 304 814.