Today the Bank Of England increased the interest rates by 0.75%, bringing the rate to 3% which is the largest sustained increase since 1989. This means that those on an average tracker will be looking at an increase of £73.50 a month and those on a standard variable would be looking at a monthly increase of £46. They also warned today “that the UK could be on course for the longest recession since reliable records began in the 1920s” (BBC News, 3rd November 2022).
Rightmove’s Tim Bannister said: “The era of historically low interest rates looks to be over, which is making it more challenging for those new first-time buyers who are stretching themselves financially to try and get out of the frenzied rental market and onto the housing ladder.
“However, compared to the volatility of a few weeks ago, mortgage rates have now started to stabilise and fall. As today’s rise was expected, we don’t think we’ll see any significant changes to new fixed rate deals based solely on today’s interest rate rise.
“Mortgage payments will be much more manageable for those first-time buyers who have been lucky enough to save up a bigger deposit of 25%, as they may find that monthly mortgage payments on a typical first-time buyer home are lower than their current monthly rental payments.
“It’s important to look beyond the headline numbers, because, while “like-for-like” mortgage costs have been increasing, mortgage brokers and lenders will be able to help people assess the different options available to manage their costs and see if they can afford to move.” (Tim Bannister, 3rd November 2023).