BoE rise to 4.5%: Mortgage Expert Outlines What This Means for Homeowners

Kellie Steed, Uswitch.com mortgage expert comments:

“On 11 May 2023, the Bank of England’s (BoE) Monetary Policy Committee (MPC) took the decision to raise the UK base rate to 4.5%. This is the 12th consecutive increase in the base rate since it began on its current path of ascension back in December 2021 – the sharpest continuous rise in rates since 1989.

“There seems to be a fairly unanimous view across the financial industry that this won’t be the last in this spate of base rate announcements, with many financial analysts expecting it to hit 5% before the end of the year. The MPC will make their next decision on the base rate on 22 June”.

On whether now’s the time to fix….

“If the end of your fixed-rate deal is approaching, then now is likely to be a good time to fix, as further increases in the base rate are expected. Fixed-rates are not so vulnerable to immediate change following the base rate as some other rate types, and some lenders actually lowered their purchase rates ahead of the increased base rate announcement, so it’s certainly worth looking at what’s available.

“Those on a tracker can expect an immediate 0.25% increase to their current interest rates and with future increases a distinct possibility, it might be time to consider other rate types. That said, the tracker deals are often lower than fixed rates to begin with, so it depends on your appetite for risk.

“If you’re still comfortably within a substantial fixed-rate deal there’s no need to worry for the time being. If you’re on a longer deal, the market could be in a slightly less volatile position by the time your deal comes to an end, as inflation is expected to continue falling, albeit gradually.”

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