Rising interest rates, the increased costs of living and high fuel bills seem to be the topic of conversation for many people currently.
Inflation is running at 7%, which is more than three times its target and is still rising. This is due to the post-pandemic surge in consumer demand and has been exacerbated by the Russian invasion of Ukraine. It is a concern for many.
UK interest rates were raised for the fourth time since December (on 5th May 2022), by a quarter of a percentage point to 1%. This is the fastest increase in borrowing costs in 25 years.
I wanted to highlight what this looks like. Please take a look at the graph above. We need to remember that borrowing dropped to an all-time low during the pandemic and by historic standards, interest rates still remain very low! Luckily many borrowers will also be cushioned from any immediate impact by fixed-rate deals.
Moving forward there are still some great deals on the market including mortgage deals for first-time buyers.
The consensus among a poll of economists by Reuters is that the base rate will rise to 1.5% by early 2023, but will remain there for the rest of that year. This remains low by historic standards. Who remembers the high mortgage rates of the early 1990’s??
If you are thinking of moving home and you need a mortgage, you’ll need an upto date AIP (Agreement in Principle). This will let you know how much can borrow. You’ll also know what your mortgage repayments are likely to look out. We don’t give out mortgage advice at JDG however we know a great team of Independent Financial advisors that can help.
Call us on 01524 843322 and we can point you in the right direction!
Thanks for reading
Michelle