The Bank of England’s Monetary Policy Committee has just announced a rise in the Bank of England base rate of 0.25% – the first increase in over a decade.
The base rate is the figure on which mortgage rates in particular are based and a whole generation of aspiring homeowners will be wondering what to make of it. Well panic not – although the base rate has effectively doubled, 0.25% remains a very small increase and simply returns us to the same 0.5% rate that had been in force between March 2009 and August last year, when it was dropped in response to the Brexit referendum result.
While those on a variable rate or tracker mortgage will notice a small increase in monthly payments, those who chose a fixed rate mortgage will not feel any effect at all.
If this new rate is passed on to mortgage interest rates, as it almost certainly will be, the monthly commitment of new buyers will be around £37.50 extra per month on a £180,000 mortgage. This is unlikely to have any direct effect on the property market.
This increase appears to be a response to increasing inflation and the indirect effects could be more noticeable. Is this the start of a rising trend? If so, then if you are contemplating a move, it would be worth doing so quickly; sell before any downward pressure on house prices kicks in, and lock in to a low fixed rate mortgage on your purchase.
As ever, as your local property experts, we’d be happy to advise, without obligation, on how this, and any other market influences, might impact on your moving plans or property value. Please feel free to call us on 01522 845845 for Lincoln, or 01724 856100 for Scunthorpe.