The Bank of England has voted to raise UK interest rates for the first time in over a decade. It has been announced that the base rate will be going up to 0.5% from 0.25% in order to curb high inflation which is said to be squeezing UK households.
Mark Carney and six other members of the Monetary Policy Committee voted for the hike, but two members voted to keep rates on hold.
— Bank of England (@bankofengland) November 2, 2017
Any homeowner on a variable-rate mortgage will take an immediate hit, which according to the Guardian make up ‘one in ten households in the UK’.
Eventually, a rate rise will feed through to more borrowers as fixed-rate mortgage deals are renewed.
The Bank of England has further stated that they only expect interest rates to rise gradually over the next three years which shows that the MPC are moving cautiously with the first rate rise since July 2007.
The consensus in the city is that there will be at least another 0.25% rate rise next year. In the long term there is speculation that rates will normalise but few mainstream economists expect the new normal to be much above 3%.
Any futures UK rate hikes will likely be “at a gradual pace and to a limited extent”, says the Bank of England. Sterling falls sharply. pic.twitter.com/asWtLIUHZm
— Jamie McGeever (@ReutersJamie) November 2, 2017
Our head of Financial Services, Stephen Ridgway, made a comment on the recent rate rise saying “base rate may have risen today and this will have an impact on what new mortgage deals mortgage lenders offer. However, at this moment there are still some incredible fixed rates available and I would urge anyone on a variable rate or coming to the end of their existing fixed rate to contact us and review this now.”
Edward Mellor’s Managing Director, Peter Barlow, said that whilst 0.25% of an increase may not sound much, the banks are already factoring future increases into their fixed rate deals and the best deals have already gone.
“I practice what I preach and fixed my mortgage last year, opting for a 10 year fixed product. If you take advice now, you can still access amazing deals and protect yourself from future increases but the longer you leave it and the closer we get to another rate increase, the more you will pay.”
If you have been affected by the new rate rise or want to have certainty over your future mortgage payments and need some, free friendly advice from our team of financial services experts please get in touch on 0161 443 4548 or fill in the form below.