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Base rate increases to 0.75%

Base rate increases to 0.75%

On 3rd February 2022, the Bank of England (BoE) announced a further base rate increase from 0.5% to 0.75%. This is the third interest rate rise in less than six months. It means that interest rates are the highest they’ve been since March 2020 when the pandemic began*.

Adam Nanson from Your Mortgage Expert comments as base rate increases to 0.75%. And what this means for home owners, landlords and property investors.

How the base rate rise will impact mortgages

“This latest rate rise comes amid spiralling energy bills and increased pressure on family finances. With prices of things like food and petrol rising at the fastest rate in 30 years. It comes as no surprise that the Bank of England has acted to try and curb inflation.

“The hope is that, if the base rate increases to 0.75%, it will make borrowing more expensive. The idea is that this will help to curb spending and drive down prices. However, the last two rate rises have had minimal impact and, especially consider the Ukrainian invasion, it remains to be seen how much of an impact this will have.

“All of which could be worrying to my clients. If borrowing is more expensive, this could mean higher mortgage costs.”

How should home owners act?

Adam continues:

“The first thing I would tell my clients is not to be too alarmed. Yes, the base rate is higher, but we are only at the point we were two years ago. Added to this, the BoE were cautious about the potential path of interest rates over the coming year. A further rate rise in May is by no means guaranteed.

“According to the BBC**, 74% of people with mortgages are on a fixed rate arrangement. This means that even as the base rate increases to 0.75% your repayments will only change once your current deal comes to an end.

“If you’re one of the around two million home owners*** are on a variable rate. It is likely that your monthly repayments will increase almost immediately.

“For those on the standard variable rate or if your fixed term deal is coming to an end, we would recommend you act now to secure a new deal. The base rate is unlikely to go down in the near future so delaying is unlikely to be a wise move.

“We will, of course, be watching the markets carefully. If you want the latest information and the most informed across market understanding, we would recommend you speak to an impartial mortgage broker like Your Mortgage Expert.”

Searching the market yourself can be time-consuming. But with our help, we can search thousands of mortgages, including exclusive deals and lenders that you wouldn’t otherwise have access to. We have regular contact with a wide range of lenders, some of whom you may not even know exist! With our help, you won’t have to search or contact each individual lender in order to compare the mortgage terms and rates; we’ll do all that for you.

If you are interested in having a no obligation chat about your mortgage, why not get in touch? We don’t charge anything up front, so by speaking to us, you are under no obligation. We are based in Salisbury, Wiltshire, but we can help you no matter where you live in the UK.

Simply call us on 01722 322683 or complete a contact us form on our website and tell us when it would be best to get back in touch with you.

The information contained within this article was correct at the time of publication. It is intended for information only and does not constitute advice. Your Mortgage Expert Ltd and Mortgage Advice Bureau cannot be held responsible for information that was correct at the time of publication but subsequently changes or goes out of date due to changes in legislation.

*source : https://www.ft.com/content/d6cc373c-b45c-4c6e-821b-13f4f3bd3e32

**source : https://www.bbc.co.uk/news/business-59140059

***source Bank of England hikes interest rate to 0.75% as it sees inflation surging to 8% | Business News | Sky News

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