9 May 2023
The Bank of England Base Bate has been increased by 0.25% to 0.50%. This is the second month in a row that The Monetary Policy Committee (MPC) have decided to increase the base rate following the Bank of Englands forecast that inflation could hit 7.25% in April, which is far higher than the target which is 2%.
What does this mean for mortgage rates?
It’s likely that lenders will increase their rates being offered in line with the base rate. We’ve already started to see some major lenders increase their rates to account for the base rate increase. Any borrowers currently in a fixed rate will not be affected, but may feel the effects when their fixed rate ends. All borrowers on a Bank of England tracker rate will see an increase of 0.25% on their mortgage interest rate.
Is the increase a worry for new borrowers?
The base rate was reduced in March 2020 to an all-time low of 0.1% as a result of the COVID-19 pandemic. An increase in the base rate was inevitable following an increase in inflation. The new rate of 0.5% matches what the rate was between 2012 – 2016. More recently before the pandemic the base rate sat at 0.75%.
As a new borrower there shouldn’t be much cause for concern at the moment, rates across the market are still very competitive and the rate increase was expected.
Contact us today to discuss what rates you could be eligible for.