The Bank of England has raised interest rates for the first time in more than three years, in response to calls to tackle surging price rises. Further rates could follow so now is a good time to secure a rate for your mortgage even if it’s not due for a while.
The Monetary Policy Committee voted 8-1 in favour of the increase to 0.25%. Rates were cut to a record low of 0.1% in March last year in response to the effects of the coronavirus pandemic. The increase came despite fears that the Omicron variant of Covid could slow the UK economy by causing people to spend less.
According to official figures, the cost of living surged by 5.1% in the 12 months to November, up from 4.2% the month before, and its highest level since September 2011.
The decision by the Bank of England to increase the base rate to 0.25% will add just over £15 to the typical monthly repayment for a tracker mortgage customer. A standard variable rate mortgage-holder is likely to pay nearly £10 extra a month. Nearly two million people in the UK have one of these two types of mortgage.
While savings rates may increase slightly, returns are still well below the rate of inflation.
For more information please click here: https://www.bbc.co.uk/news/business-59682521
