The Bank of England has voted to increase the base rate by 0.15 percentage points to 0.25 per cent at its December meeting, the first rate rise in three years. The rise in interest rates was expected yet still came as a surprise as the Bank tends not to move rates in December. However, with inflation hitting a ten-year high of 5.1 per cent, well above the Bank’s 2 per cent target, the Committee clearly felt it was finally time to make a move.
In many ways, it won’t make much difference as the markets have already priced in two or even three rate rises, and mortgage pricing has already edged upwards accordingly. Lenders have pulled their cheapest rates, although that said, there are still plenty of competitive deals available starting from not much more than 1 per cent. Banks have plenty of money to lend and remain keen to lend it.
Borrowers do not need to panic as many will be on fixed-rate mortgages so won’t see any increase in their monthly payments. Those on variable rates will see an uplift in their monthly costs but it will be a fairly modest rise, with rates remaining at incredibly low levels.
However, if borrowers are concerned about further rate rises, it is worth securing a fixed-rate deal sooner rather than later. Get in touch for more information as to the best deal for your particular circumstances.
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