The Bank of England has raised interest rates from 0.25% to 0.50%. This is the second increase in the space of two months and is a measure to tackle the continued rise in inflation.
The latest figures from the consumer prices index (CPI) predict inflation is expected to peak at 7.25% in April, averaging close to 6% throughout 2022. This is the fastest price growth for over thirty years.
The change to the base rate – the first back-to-back increase since 2004 – means a homeowner with a typical tracker mortgage will see their monthly repayment increase by £25.76. A homeowner with a typical standard variable rate mortgage is likely to see an increase of £15.96 a month.
Nearly three-quarters of all mortgage borrowers in the UK are on fixed-rate deals, thus only seeing a change to their monthly repayments when the existing term ends. It is estimated that 1.5m fixed-rate deals will expire this year, with a further 1.5m expiring in 2023.
Thomas Jackson, Managing Director of Cooper Associates Mortgages, said:
“With inflation continuing to surge, it was anticipated that a further increase to the interest rate was likely to occur in the first quarter of this year. The Bank of England has a delicate job of trying to curb inflation, while at the same time not dampening the economic recovery which is taking place. We anticipate a further increase to interest rates in the coming months, and it is possible there will be two or three further increases throughout 2022.
Today’s increase had been largely factored in by lenders already, however we will be keeping a close eye on rates in the coming days and weeks and advising our clients accordingly. With further rate rises expected, it is inevitable mortgage rates will also increase again later this year, albeit they remain at extremely low rates currently.
If you are a first-time buyer or perhaps you’re due to remortgage in the coming months, we advise you to speak with one of our mortgage advisers as soon as possible, to take advantage of the best rates available. A mortgage offer can be obtained up to six months in advance, allowing you the peace of mind to secure a rate now and not be affected by any future increases to the base rate. You can book a consultation with Cooper Associates Mortgages today by visiting https://www.cooperassociatesltd.com/contact-us/book-an-appointment/”
