Following today’s news that the Bank of England has hiked base rates to 1.25%, we bring you reactions from a number of mortgage brokers and advisers which clearly show that this latest rate rise means yet more pain for borrowers as they comment:
Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco: “Though widely expected, this latest rise will be another hammer blow to borrowers and it will no doubt lead to yet another spate of mortgage lenders quickly pulling their current product offerings and re-pricing them upwards. For those who are looking at remortgaging now, there will be a sizeable payment shock as they come off lower fixed rates into a market priced around 1% higher than they are currently paying. All of this exacerbates the cost-of-living crisis that is already throttling household finances, as higher mortgage payments join rising energy, food and fuel costs. It is also starting to feed through into lenders’ affordability calculations, meaning people are seeing their borrowing power diminish. At some stage, the rate rises we’re seeing will start to affect the housing market and we expect the pace of growth to fall back over the coming months. That said, demand is still high and successive Governments’ failures to make a dent in the supply of good quality, affordable housing will support prices.”
Ross Boyd, founder of the always-on mortgage comparison platform, Dashly.com: “Rates didn’t go up by half a percent as some had expected, especially after yesterday’s Fed announcement, but more rises are almost certainly on the cards as the Bank of England attempts to control inflation. It’s inconceivable to think the housing market will remain unaffected by the current interest rate cycle, which is now firmly on an upwards trajectory. The property market will cool throughout 2022 and in 2023. The era of cheap money is drawing to a close. When they come to remortgage, it will be less a case of rate shock for many borrowers but rate trauma. The pending remortgage crunch will significantly add to the cost of living crisis.”
Sabrina Hall of Lichfield-based Kind Financial Services: “This decision was expected given the situation with inflation and a lot of lenders have already increased their rates in anticipation of this increase. I think the Bank of England has to be careful not to increase rates too far and too fast as this could have a massive impact on people already struggling with the increased cost of living. If you are currently on a fixed rate, your mortgage won’t be impacted by this increase. However, if your current fixed rate is due to expire within the next six months please speak to a mortgage adviser now so that they can secure you a rate before we see any further increases.”
Rhys Schofield, managing director at Belper-based Peak Mortgages and Protection: “Let’s make the cost of living crisis worse by increasing the cost of homeownership when inflation is being driven by wider issues such as Brexit and global issues like the war in Ukraine. It feels like policymakers just seem to be totally detached from the reality of normal people’s lives.”
Rob Gill, founder of London-based Altura Mortgage Finance: “The hike in base rate by 0.25% is perhaps lower than many expected, especially after the US Fed opted for a rise of 0.75% earlier in the week. The Bank of England, while mindful of inflation, must also have an eye on the cost of living crisis and potential recession risk, as well as the economic risks posed by Brexit, and is clearly opting for a relatively measured approach to raising rates.”
