The Bank of England increases interest rate to 5.25%
Thursday 3 August, 2023
The Bank of England has raised the base interest rates for the 14th consecutive time as it continues
its struggle to control the stubbornly high inflation rate.
Many economists had predicted the BoE would raise the interest rates from the present 5% on
Thursday. The results would again see higher interest rates for those with mortgages and loans, but
conversely higher rates for those with savings.
UK inflation, the rate at which prices rise, remains elevated and is putting households under
pressure.
The current inflation rate fell by more than economists had expected in June, standing at
7.9%. It is at its lowest level in over a year, however, the inflation rate remains at nearly four times
the BoE target of 2%.
How much would a standard mortgage repayment be?
|
Amount Borrowed |
2% Interest |
4% Interest |
Increase |
6% Interest |
Increase |
|
£100,000 |
£331 |
£443 |
£112 |
£570 |
£239 |
|
£200,000 |
£663 |
£886 |
£223 |
£1,140 |
£477 |
|
£300,000 |
£994 |
£1,328 |
£334 |
£1,771 |
£717 |
|
£400,000 |
£1,325 |
$1,771 |
£446 |
£2,281 |
£956 |
*Source: BBC
The table above clearly illustrates how the increases in interest rates have a significant impact on mortgages repayments.
The increases in interest rates also dramatically affects the types of mortgage products the lenders make available on the market. This means that we continue to recommend that speaking to a professional mortgage broker is highly important if you are in a position to renew your mortgage. Mortgage deals are often agreed in principle then can be held in place for 6 months. This provides time to see how the mortgage market continues to change. It is possible that there could be a better deal available during this time.
Tracy Dove, Financial Consultant & Mortgage Broker in Basildon & Exeter, said:
"As the Bank of England continues to battle high inflation with its increases in interest rates, we are still witnessing the affects on the range of mortgage deals that lenders have on the market. Unfortunately, we are continuing to suffer with the highest mortgage interest rates we’ve seen for many years”.
Tracy continued: “Given the changes we’ve seen to the market, we continue to strongly recommend that if you are currently on a fixed-rate mortgage which is approaching the end of your deal, you really should act now. However, if your current mortgage deal is going to end sometime within the next six to eight months, then we highly recommend that you seek the advice of a professional mortgage broker as soon as possible."
We understand that these interest rate increases may have a negative impact on your mortgage payments. If this is the case, then we recommend you should call us as soon as possible on 01707 872000 to discuss your financial circumstances with one of our professional mortgage advisers.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
