The Bank of England has raised interest rates by 0.25% to 4.5% and they now forecast there will be no recession this year.
The economic growth has been upgraded but the Bank warned inflation will be higher this year than they had previously thought.
Managing Director of Barrows and Forrester, James Forrester, commented, “It’s clear that the Bank of England’s aggressive approach to managing the economy via a string of interest rates simply isn’t working and it’s the time the government stepped in to make Britain grow again.
A twelfth consecutive increase will do little to stimulate the property market, with buyers left with little choice but to offer less due to the squeeze on affordability. If sellers wish to sell, they also have little choice but to accept the current reality of what their home will fetch in the market.
However, the real worry is for those coming off a fixed term having previously secured a very favourable rate. The sharp rise they will experience in the monthly cost of their mortgage will be a real source of anxiety and many will be wondering just how they are going to manage.”
CEO of Octane Capital, Jonathan Samuels, commented, “Today’s decision has pushed the base rate to its highest in almost 15 years. While the Bank of England expects to maintain their ‘modest but positive’ return to economic health, a twelfth consecutive hike will be understandably less welcomed by homeowners across the nation; particularly those on a variable rate who will now be squeezed even tighter financially.
The good news is that the mortgage market instability that followed last September’s mini budget has now subsided and, for those looking to secure a mortgage today, there remains a range of options available.”
Director of Benham and Reeves, Marc von Grundherr, commented, “A further hike to the cost of borrowing will do little to enthuse the nation’s aspirational homeowners, who are currently battling with an astronomical cost of living while attempting to save enough to climb the ladder.
Today’s latest hike should serve as a warning for those who are considering borrowing beyond their means, or for those contemplating the re-introduction of the 100% mortgage. In the current climate, it simply isn’t worth the risk and you’re far better off waiting and accumulating a more stable nest egg with which to place a mortgage deposit.”
Head of Corporate Partnerships at Sirius Property Finance, Kimberley Gates, commented, “A twelfth consecutive interest rate hike will come as a blow to the nation’s homebuyers who will now see the cost of securing a mortgage climb that little bit higher at a time when they are already struggling with the wider cost of living.
We expect that interest rates will continue to rise before they fall, with the general consensus being that they will peak at five percent and so it looks set to get that little bit bleaker, before it gets any better.”