18 March 2022

Bank of England raises interest rates to 0.75 per cent

The Monetary Policy Committee has voted by a majority of 8-1 to increase Bank Rate by 0.25 percentage points, to 0.75 per cent.

The markets had already factored in a Base Rate rise, with an upward pricing trend across the board over recent weeks and the days of sub-1 per cent fixes long gone. The Bank has to carefully balance the need to control inflation with the wider economic challenges posed by rising interest rates.

For every £100,000 on a variable-rate mortgage, a quarter point rate rise adds £250 a year. While pricing on new fixed-rate mortgages has edged upwards, it is still possible to fix for two or five years from less than 2 per cent, so borrowers looking for certainty would be wise to move sooner rather than later.

The purchase market is still active although much of the froth has gone. Activity in the remortgage market is picking up and is set to continue as borrowers look to secure rates before there are further increases. Rates can be booked up to six months before they are required, and we are getting a lot of interest from motivated borrowers in doing this.

Even with this latest rate rise, it is worth remembering that we remain in an extremely low interest rate cycle and expect that to be the case indefinitely.

Share

SEARCH

Share