The Bank of England’s Base Rate Climbs to a 13-Year High
The Bank of England has upped its base rate to 1% in a move that sees the cost of borrowing money climb to a 13-year high.
The rate hike of 0.25% was widely expected amid rising inflation and the cost of living crisis that continues to dominate headlines in the UK.
Many factors are behind the inflation surge, including high energy prices and record petrol costs, both of which have not been helped by Russia’s ongoing invasion of Ukraine.
Inflation is currently pegged at 7%, its highest level since 1992, and experts have forecast that it could climb to as high as 10% this year, some way off the central bank’s 2% target for 2022.
So, what does this mean for mortgages? Well, with the cost of borrowing having increased, many mortgage lenders will update their product ranges and increase their rates. This will result in scores of new borrowers and remortgage customers having to pay more for their home loans.
Those on existing variable rate agreements are also likely to see their rates go up and will be among the first to feel the effects of the base rate increase.
There are, of course, ways borrowers can safeguard themselves against rate rises. One option could be to lock into a lengthy fixed-rate deal with a low rate while they’re still available.
Pete Mugleston, Online Mortgage Advisor’s managing director, says: “As the base rate increase was expected, many of the mortgage brokers in our network are ready and waiting to help prospective borrowers avoid being stung by a sharp increase in interest rates.
“There are still great mortgage deals on the market right now, but while inflation remains high, further rate rises cannot be ruled out. With this in mind, anyone who is worried about the impact on their mortgage or remortgage application should get in touch with us immediately.”
The Bank of England is next due to review its base rate on 16th June. For more information about how the base rate affects mortgages, see our article on this topic.