BOE Set To Raise Interest Rates Again?

by | Thursday 4th Aug 2022 | Mortgage News


Today is crunch day as the Bank of England must now decide whether they will raise interest rates to unprecedented levels. This comes as the European Central Bank and the US Federal reserve have both done exactly that by raising borrowing costs to extraordinarily high rates to tackle economic struggles. Currently the rate of inflation for the UK is at a 40-year high of 9.4% and rising due to things such as the pandemic and the ongoing war in the Ukraine. In late 2021 it was predicted that inflation would peak at around 4%….how wrong we were.

Financial analysts and experts are predicting that the BOE will raise interest rates this week by as much as 0.5%, something that has not been seen since 1995. Meaning that the base rate will go up from 1.25% to 1.75%. In the mortgage world, there has definitely been an ominous ripple running through the lending market as over the last few days, banks and building societies have obviously been given a tip off and have more or less all the big-hitters, Santander, HSBC, Halifax, Barclays, Nationwide, NatWest have all either increased their rates or will imminently. In the last few days alone, TSB, HSBC, Santander and Barclays have all announced interest rate hikes.

This morning, Barclays sent out an announcement to all registered mortgage brokers to say that they will be withdrawing the following product, we assume, in preparation for the predicted rate increase from the BOE:

Barclays mortgage product withdrawals:

Residential Purchase and Remortgage Fixed rates

  • 3.42% 5 Year Fixed  £999 product fee, 60% LTV, Min loan £5k, Max loan £2m

Residential Remortgage Fixed rates

  • 3.50% Great Escape™ 5 Year Fixed  £0 product fee, 60% LTV, loans £50k – £2m

Residential Purchase Fixed rates

  • 3.48% 5 Year Fixed  £999 product fee, 85% LTV, Min loan £5k, Max loan £2m
  • 3.51% 5 Year Fixed £999 product fee, 90% LTV, Min loan £5k, Max loan £570k

So what can mortgage borrowers do? Unfortunately you/we can’t stop the BOE or lenders from increasing their rates but what we can do is plan for the future and make sure that you are as financially secure with your mortgage as possible. We are confident that once inflation has calmed down again (fairly soon) then rates will start to go down again. If you already own a property and have a mortgage, we advise you to give us a call so that we can make sure that your current deal is beneficial for you and will continue to be beneficial for you until interest rates go back down. If you are looking to get a new mortgage i.e. purchase a new home or a buy-to-let, we can still access over 90 different mortgage lenders and can get you the best possible rate available. We will then help you to plan your mortgage so that when interest rates do go down, you will be able to remortgage or switch products onto a much better and much lower rate.

If you or someone you know is worried about the rate rises or just wants to discuss anything to do with a mortgage, please feel free to give our advisors a call today to see how we can help. 

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