Adrian Anderson, Director of property finance specialists, Anderson Harris
“With the Bank of England raising interest rates once again today to 1%, the highest level in 13 years, this is an attempt to tackle the crippling cost of living crisis gripping the UK. Like many banks around the world the Bank of England is attempting to slow down inflation which reached a 30 year high of 7% in March.
With inflation so high many City economists are anticipating more increases. Three of the Bank of England Monetary Policy Committee members wanted a larger increase to 1.25% however, Governor Andrew Bailey recently noted that the Bank of England is walking a “narrow path” between growth and inflation. There are concerns that the soaring cost of living and higher borrowing costs due to the high inflation will damage consumer spending which may force the banks to reconsider future rate rises.
Today’s Bank of England rate rise will not be welcomed by borrowers on variable rate mortgages as the cost of their mortgage will increase.
The good news is that c.74% of UK homeowners have a fixed rate deal. These borrowers will not be affected today however it’s likely that the fixed rates available in the future will be more expensive hence anybody with a fixed rate which is ending shortly should shop around as soon as possible.”