The latest base rate increase is the twelfth consecutive rate rise since December 2021 as the Bank of England tries to curb inflation
The Bank of England has increased the base rate from 4.25% to 4.5%. This marks the twelfth consecutive increase since December 2021. Financial analysts had predicted this latest increase, with one spokesperson describing it as a foregone conclusion.
The base rate stood at 0.1% in December 2021 before the bank started to tackle price rises caused by economies recovering after the pandemic.
So what does it mean for you?
• If you’re on a fixed-rate mortgage deal, your monthly payments will remain unchanged until your fixed term ends.
• If you’re on a standard variable rate, your payments will go up if your lender chooses to pass on the increase.
• If you’re on a tracker rate that moves in line with the base rate, you will pay more.
What if you need to remortgage?
If you’re due to remortgage this year, contact us today so we can explore your options and lock in the most competitive rate for you as soon as possible. Please don’t leave it until the last minute.
Six months’ notice is ideal, but talk to us now if you have any concerns. Even if you think it’s too soon, we’d be delighted to hear from you and offer you advice.
Are further increases coming?
Will the base rate increase again this year? It’s impossible to say for sure what will happen. The consistent rises we’ve seen have occurred as the Bank of England is trying to combat inflation, which stood at 10.1% in March. Inflation was predicted to fall faster than it has done so far. As a result, some investors expect the base rate to reach 5% this year.
However, one economist said that when inflation is under control, interest rates may return to pre-pandemic levels.
Last month, the International Monetary Fund predicted that recent increases in real interest rates should be temporary and that they will come down and stay down soon.
Plan your strategy
However, no one can say for sure what will happen. There’s never been a better time to get bespoke mortgage advice. We recommend developing a mortgage strategy and knowing where you want to be in five or ten years. Of course, you can’t control interest rates, but you can take control of your future plans and whether you need to make any changes.
Contact us for advice about your mortgage.