Bank of England interest rate increase to 0.5%
The Bank of England has today made it's anticipated interest rate increase to 0.5%
The measures, taken to help bring inflation down to the bank's target 2% within two years, will squeeze household budgets and shortly follows a previous recent increase to 0.25 in December 2021
Potential good news for savers who may as a result see saving rates increase, although many savers will have been hoping for a more significant increase.
For mortgages the extent of impact now remains unknown as lenders review raising their variable rate products. Money Saving Expert reports UK Finance's evidence that 74% of all current mortgages are fixed rate, so borrowers will see no repayment increase. However for the remainder 26% on tracker or variable rate products borrowers remain at the whim of their lender as they await their decision.
Further interest rates are anticipated. The Financial Times reports today that markets are now expecting the Bank of England to lift rates again to 1% in May, and perhaps again to 1.5% in November.
If you are on a variable rate or tracker mortgage the period between now and May might therefore prove a prime opportunity to fix into a rate with a new lender, and at OXON PS we are advising clients in this position to speak to one of our panel of local independent mortgage brokers.
For the Financial Times and Money Saving Expert articles mentioned above please see the links below: