In December 2021, the Bank of England announced an increase in interest rates. This was the first interest rate increase in over three years. The change saw interest rates move from 0.1% to 0.25%.

What will this mean for mortgage holders?

For households that hold a tracker mortgage, this increase is likely to see monthly mortgage payments rise by £15.

For households that hold a standard variable rate mortgage, this move is likely to see mortgage payments increase by £10 per month.

There are more than two million households who hold one of these mortgage types in the United Kingdom.

What are industry experts saying?

Suren Thiru, is the head of economics at the British Chambers of Commerce, who spoke about the increase in interest rates, saying; “The Bank of England's decision to raise interest rates was surprising, given mounting uncertainty over the economic impact of the Omicron variant. While today's rate increase may have little effect on most firms, many will view this as the first step in a longer policy movement - not as a partial reversal of last year's cut.”

Eleanor Bateman, Policy Officer at Propertymark, commented: “The increase in base rate to 0.25% is a small and necessary step and one that most had anticipated for some time. Mortgage rates have been creeping up over the past few months, and while those on variable rates will see payments increase, the cost of borrowing remains low relative to historic levels. Though, traditionally, the winter months see a decline in activity, our Housing Market report shows sustained demand with average sales agreed maintained to the end of October.”

Eleanor Bateman continued by saying; “With indications that lifestyle factors are continuing to prompt many into making a move, we do not expect today’s announcement to have a significant, negative impact on the market. Continuing uncertainties over COVID-19 may, however, have more lasting effects, and we would urge the UK Government to consider the property industry’s significance in any forthcoming decisions on further tightening of pandemic-related measures.”

Paul Dales, chief UK economist at Capital Economics, suggests rates might need to increase further before too long. Paul said; “The MPC once again said that a 'modest tightening' of monetary policy is likely to be necessary, so this is not looking like a case of one and done. We still think that weaker economic growth and a faster fall in inflation will mean that interest rates won't rise to 1% by the end of next year, but it's just become more likely that they rise above our 0.5% forecast.”

Key takeaways highlighted by Zoopla

Zoopla is one of the leading property portals in the United Kingdom, and they have published their key takeaways regarding the increase in interest rates on their website:

• The Bank of England has increased interest rates from a record low of 0.1% to 0.25%

• The move means nearly 2m homeowners will have higher monthly mortgage repayments

• The increase will add around £14 a month to repayments for someone with a £200,000 mortgage

Contact Fraser Reeves for all your Newton-le-Willows property needs

As local agents in Newton-le-Willows, we are keen to support vendors, buyers and landlords in the area as best we can. We offer an extensive range of services, aimed at helping you make your next move with confidence.

If you would like to arrange a property valuation, or discuss your property options, please call Fraser Reeves on 01925 222555.