Latest news coming out of the Bank of England says that they are raising the BoE base rate an extra 0.25% to 1.25% from the previous 1.00% which was only raised last month!
In an attempt to tackle a potential risk of recession, the Bank of England has announced that their base rate has risen to 1.25%, the highest it’s been in 13 years. It is also the fifth consecutive increase since December 2021 as the bank continues to move against surging inflation.
The bank cites the fallout of the pandemic and also the conflict between Ukraine and Russia as major factors in its decision to raise the base rate again. Three members of the Bank’s nine-strong committee – along with some analysts – favoured an ever bigger rise of 0.5%.
David Bharier, head of research at the British Chamber of Commerce, says it could impact on smaller businesses which may be reliant on banking or overdraft facilities, such as those buying goods in bulk in an attempt to offset raw material shortages.
“The increase signals the Bank’s intention to tackle inflation but businesses have been raising the alarm about spiralling prices since the start of 2021 and a higher interest rate is unlikely to address many of the global causes of this,” he adds.
A graph showing the changes in the base rate (Source: BBC News)
What does this mean for your mortgage? If you have your mortgage fixed then your rates and repayment won’t immediately change however interest rates will almost certainly increase again meaning that when you do come to remortgaging, your products and payments will most likely be higher. If you do not have a fixed rate mortgage and are currently on the standard variable rate or a tracker mortgage, this is directly influenced by the base rate change and your monthly payments will go up immediately. If you think you are already paying too much for your mortgage or are concerned about your current mortgage deal, you can learn more in our recent blog post on overpaying your mortgage.
If you want to know more about the base rate increase and how this might affect your mortgage, give our team of advisors a call on today.
