At their meeting on 2nd August, the Bank of England’s Monetary Policy Committee raised interest rates for just the second time in ten years to 0.75%.
The small rate rise will affect those on variable and tracker rate mortgages (around 3.5 million), although increases for most are likely to be fairly minimal. Any mortgages taken out in recent years, which have been subject to strict mortgage lending affordability criteria, should have factored in such an increase. Furthermore, the vast majority of new loans are on fixed rate deals.
Meanwhile, base rates, while at their highest level for nine years, are still very low by historic standards and mortgage rates remain low. The question potential borrowers will be asking though is, is this the start of many increases?
Another rate rise before the end of the year looks extremely unlikely. The Bank of England has suggested that any future increases will be gradual with the next small rise (0.25%) in mid-2019 and a further one before the end of 2020.