What Have The Bank Of England Announced?
This afternoon, the Bank of England announced that they will be raising interest rates by 0.5 per cent to 4 per cent. This is the highest interest rates have been since 2008. However, the latest forecasts suggest that this will be the last interest rate rise in quite some time, with some predictions believing that interest rates have now peaked. Furthermore, the Bank of England noted that the UK will experience a shorter and less severe recession than previously anticipated. They have also predicted that inflation will begin to fall back to 3 per cent by the end of the year from its current status of 10.5 per cent reflecting a much shallower recession. But what does this mean for the property market?
What Do Rising Interest Rates Mean For My Mortgage?
The latest predictions suggest that those with typical tracker mortgages will pay an additional £49 per month, whereas those with variable rate mortgages will pay an additional £31 per month. Financiers and property professionals have been anticipating another rise in interest rates for quite a while, allowing them to prepare for today’s announcement and advise their clientele accordingly. As such, Andy Butts, Group Sales and Lettings Director at Centrick, believes that this rise is certainly manageable:
“Today’s interest rate rise was widely expected and as a result I don’t expect it to have a huge impact on people in the market for new mortgages. We’re seeing house prices starting to level off as a response to this and the focus from purchasers should be about securing a property at the correct value that fits with their long term affordability.”
Andy also suggested that the continuing rise in interest rates could add a level of urgency to ongoing sales. With interest rates on an upward trajectory, prospective buyers are encouraged to start their property journey as soon as they are ready, adding that:
“Reality is starting to sink in with the public and they are realising that this level of interest rate is here to stay and should they be wishing to purchase a property there’s little merit in holding fire.”
Although this is the tenth interest rate rise in a row, Marc Dueck of ME Financial believes that those paying mortgages will still have enough time to switch rates to mitigate any detriment to their finances:
“The last interest rate increase of 0.5% also wasn’t unexpected and we saw the continuation of fixed rates available from lenders continue to reduce. Lenders don’t like uncertainty and price based on a more long-term outlook when it comes to fixed rate pricing.
If you are on a tracker or a variable rate however, your interest rate will likely increase in response to this, so if you are free to move your mortgage in the next 6 months, it’s a good time to look at what your options may be.”
For more information on how the Bank of England’s actions could impact your mortgage or future purchase, contact our friendly team of property experts using the form below: