Today the Bank of England Monetary Policy Committee voted to increase Bank Base Rate by 0.25%, taking it up to 0.5%.
Everyone, including us at Coreco Towers, has been speculating about the results of today’s vote. Given the runaway inflation figures, it was no surprise that the Bank of England felt the need to increase Bank Base rate once more.
The Bank of England is stuck between a rock and hard place and has to come out fighting in order to at least try to temper inflationary pressures. This could be the first of a few rises this year, but the worry is that this will have minimal effect, because of the nature of this cost-push inflation.
Whilst it will not have too much effect on the majority of mortgage borrowers who have long since run to the sanctuary of fixed rates, it will continue to drive prospective buyers and those looking to remortgage to act sooner rather than later as they flock to lock into some of the lowest rates before they inevitably increase further.
Added to the increase in energy bills we are all facing it may seem that peoples borrowing power starts to wain slightly as lenders take into account these extra costs.
That said, we are still in a low interest rate environment right now with lenders remain eager to lend, and this competitive pressure will ensure that the mortgage market remains very much open for business and affordable to the majority of borrowers.
What we do have to be wary of, are all those borrowers who are unable to move as Mortgage Prisoners, or trapped with properties that need cladding remediation works done. They will be hoping that help comes soon so they are not left at the mercy of increasing rates in the future.