Today the Bank of England increased interest rates to 1%, an interest rate not seen since 5th February 2009. With the energy crunch and Covid shutting down key manufacturing and production facilities in China, we can safely predict that the era of low-interest rates has now officially come to an end, and indeed there is a high possibility that further rate rises are on the horizon.
What is probably the starkest of warnings is the inflation forecast. Given the challenging global conditions at the moment, prices are expected to rise. This is nearly double the Bank of England’s previous forecast.
What Does This Mean for Mortgage Interest Rates?
Mortgage Lenders / Banks will increase their base rate almost immediately after this announcement and this will impact existing customers on base rate deals. As for new customers looking to buy a home, the Bank of England decision doesn’t automatically impact the pricing of new mortgage products. Banks / Lenders typically buy a tranche of funds at a set interest rate months in advance.
However, what this does mean is that anyone thinking of getting a mortgage or remortgaging should look at the options available right now and speak with a regulated mortgage broker. I personally don’t see many Fixed rate options staying as low as they are now for much longer.
Author: Ben, Glow (CeMAP, BSc Hons)
Date Published: 5th May 2022