Interest rates rise again to 15-year high of 5% - what does this mean for mortgages? 🚀
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Since the Monetary Policy Commitee (MPC) first started to raise interest rates from their record low of 0.1% in December 2021...
Homeowners with variable rate mortgages have now seen their mortgage costs jump by £566 a month!
Key takeaways from Zoopla's latest report:
🔸 The Bank of England has increased interest rates by 0.5% to 5% as it continues to battle high inflation
🔸 It was the 13th consecutive meeting at which the MPC has hiked the official cost of borrowing
🔸 The latest increase adds a further £60 a month to repayments for homeowners with a £200,000 variable mortgage
🔸 An estimated 850,000 homeowners have a tracker mortgage, and 1.1 million are on their lender’s standard variable rate – both of which move up and down in line with changes made to the Bank Rate
🔸 Meanwhile an estimated 1.4 million homeowners who have fixed rate deals that expire this year will also face significantly higher rates
🔸 Economists predict further interest rate rises this year, peaking at 6%
🔸 Rates are rising in order to reduce inflation.
🔸 Inflation target is 2%... Currently over 7%!
🔸 Glimmer of hope... Inflation is responding well, therefore experts predict a cut in interest rates by the middle of 2024
What does this mean for mortgages?
🔹 For those on variable rate mortgages, the interest rates increase will mean their mortgage rate will also rise
🔹 People on fixed rate deals will be protected from the latest hike until they come to remortgage
🔹 Expecting to face significant payment shocks when renewing their deals
🔹 Mortgage lenders have withdrawn nearly 400 products during the past month
🔹 Current rates: 6.19% for 2-year fixed rate mortgages and 5.81% for 5-years
For more advice on mortgages and full details of this article from Zoopla, click here.
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