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Posted on September 6th 2022 by movingin-adm
Double-whammy interest rate rise this month, predicts analyst
A leading business consultancy says the Bank of England will once again increase interest rates by twice the minimum permitted.
CMC Markets says the Bank’s next meeting, in mid-September, will see the base rate rise from 1.75 per cent now to 2.25 per cent.
This directly impacts mortgages on variable rates – around one in five households in the UK – and another 3.1m whose fixed-rate periods expire in 2022-2023, according to UK Finance estimates. Borrowers whose repayments are directly linked to the base rate, as set by the Bank of England, will now face mortgage repayments at rates between 3.0 and 4.0 per cent, up from 1.75 and 2.75 per cent only five months earlier.
This will inevitably spill into rent prices, says the consultancy.
CMC Markets analysed the latest data for June 2022 from HM Land Registry, published on August 17, and concluded that the likely tendency for house prices is in a temporary slowdown, which is good news for those waiting a little longer to buy a home.
“… The buy to let market is equally volatile. Landlords will either pass the increased mortgage repayments onto tenants by increasing their rent or simply sell fast to lock in a better price. Right now though, those already on the property ladder are generally better off staying put rather than moving or re-mortgaging. They would not get a good deal on their old house in this market and may likely end up losing more money overall.”
He predicts a tough 18 months or so ahead.
He says the UK is projected to enter a recession in the final quarter of this year. The country’s economy will contract by 1.25 per cent in 2023 and 0.25 per cent in 2024, however, inflation is becoming a much bigger long-term threat, with unrealistic chances of falling back to the desired 2.0 per cent much before 2024.
As it stands with the current government measures – notwithstanding any change introduced by a new Prime Miniister – inflation is expected to peak at 13.3 per cent in October and will not decline significantly until 2024.
Original Source: Letting Agent Today.
Original Author: Graham Norwood.
Double-whammy interest rate rise this month, predicts… (lettingagenttoday.co.uk)
