The Bank of England (BoE) has put up interest rates for the 11th consecutive time since December 2021, in an attempt to combat a surprise jump in inflation. Only last month, the Governor of the BoE Andrew Bailey expressed cautious optimism that inflation had peaked and there would be no need for a further rise in interest rates.
However, inflation rates jumped unexpectedly from 10.1% in January to 10.4% in February, driven by the increased cost of fresh food, and in particular tomatoes, peppers, and cucumbers. This has driven up the cost of eating out and household grocery bills. Women’s clothing has also risen in price.
The ONS chief economist, Grant Fitzner, said: “Food and non-alcoholic drink prices rose to their highest rate in over 45 years with particular increases for some salad and vegetable items as high energy costs and bad weather across parts of Europe led to shortages and rationing.”
Inflation rates now stand at 4.25%, up from 4% at the beginning of March and the highest level since the financial crisis 14 years ago. Experts are now predicting that rates will peak at 4.5% in the summer. The BoE has a target to keep inflation at 2%, but a series of events including the pandemic and the war in Ukraine have sent it spiralling.
For mortgage holders on a fixed rate, the interest rate rise will not have an immediate impact. Those with a tracker or variable rate mortgage can expect to see an increase of between £15 to £24 on average in their monthly repayments, according to the BBC.
This means that since December 2021, average monthly payments have increased by almost £400. Furthermore, those coming to the end of a fixed rate deal and those seeking a new mortgage will face higher repayments. For this reason, it is advisable to seek the guidance of a professional mortgage broker to help identify the best deals.
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Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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