17 June 2022
Bank of England raises Base Rate to 1.25 per cent
The Bank of England’s Monetary Policy Committee has voted to increase Base Rate by 25 basis points to 1.25 per cent, the fifth rise in as many meetings. Members voted 6-3 in favour of the increase in the face of rising inflation, with three members favouring a 0.5 per cent rise. The Bank also forecast that the headline rate of inflation would top 11 per cent in the autumn.
There was plenty of speculation that rates would rise more aggressively, with money markets factoring in a 50 basis points increase until the latest GDP figures were released. These showed a fall for the second consecutive month to 0.3 per cent in April, resulting in another gradual increase in Bank Rate. Swap rates have recently increased markedly, with many specialist lenders repricing their product ranges upwards for new borrowers.
With many homeowners already on fixed-rate mortgages, they will be protected from any increases in their monthly payments. However, those on base-rate trackers will see their mortgage rate rise by the full 25 basis points, while those on their lender’s standard variable rate will also likely see a hike by the same amount.
Those on variable-rate mortgages who are worried about this latest rate rise, as well as the potential for further hikes, may wish to consider a fixed-rate mortgage. While pricing has increased on these, two-, five- and ten-year fixes are all still available from less than 3 per cent and give peace of mind, as well as security from further increases.
It is also possible to secure a new mortgage up to six months before the previous deal comes to an end. SPF Private Clients scours the market on behalf of borrowers, finding the best deal for their circumstances – whether this is from an existing lender or another provider. Get in touch for more information.