The Bank of England has raised interest rates for the fourth succesive time, the highest level since February 2009. It increased rates from 0.75% to 1% to tackle spiralling inflation made worse by Russia’s war in Ukraine.
The property sector has benefited from exceptionally low mortgage rates in recent years. However, the Bank of England is likely to continue to make similar interest rate hikes throughout 2022.
Andrew Bailey, the Bank’s governor, said there was a “narrow path” the central bank had to navigate between the dual risks of inflation and recession facing the British economy. He said the inflation shock had been made worse by the impact on supply chains from Covid lockdowns in China and the rise in energy costs since the war in Ukraine.
How will interest rate rises affect you?
Quite obviously, the biggest concern around a rise in interest rates is the impact on the cost of mortgage payments.
About a third of UK adults have a mortgage. Of those, three-quarters have a fixed mortgage, so will not be immediately affected. The rest – about two million people – will see their monthly repayments rise. This will be a concern for buy to let investors who will see their monthly profits decrease.
Take Action – Review your mortgage
We are encouraging our clients to review their mortgages and plan for the year ahead.
If you are on a tracker or have a remortgage coming up in the next six months please get in touch with our experienced mortgage brokers. Rates are likely to increase again, we can help secure a competitive, long term interest rate for your property now.
Our mortgage experts are at hand to help you with all of your mortgage needs. To speak to a member of our team please call 020 3645 4322 or get in touch via our website.