Bank of England increase interest rate to 4%

This announcement marks the 10th consecutive increase to the base rate taking it to the highest level seen since the financial crisis of 2008, however, economists predict that it is nearing the peak. The MPC came to their decision to increase the base rate by evaluating the nation’s current economic position and in particular, inflation rate.

The Government have a target of keeping inflation at 2% and with the current inflation rate sitting at 10.5% it’s clear to see why the Bank of England took another measure to reduce it. In October 2022, inflation was reported at 11.1% and has since dropped month on month which supports today’s decision from the MPC.

How does today’s Bank of England announcement impact me?

Today's announcement will not affect those with fixed-term mortgages, but it is imperative to consider your next steps in advance, especially if your current deal expires within the next six months.

Those on a variable-rate mortgage will see monthly repayments increase in line with today’s announcement by the Bank of England (0.5% increase). Based on a borrowing of £250,000 over a 30-year term, looking at a 0.5% increase in interest rates from 3.5% to 4%, you could see your monthly repayments rise by approximately £70.

Saving becomes more lucrative

A higher base rate spells good news for those saving or planning their retirement. Banks and building societies should pass on better rates to savers. Pension providers should also reflect today’s interest increase through higher annuity rates.

How can we help you

If you’re interested to learn more about today’s announcement or are one of many impacted by the rise in the interest rate, we’d love to speak to you. With access to over 90 lenders and a panel of insurance providers, we’re well positioned to support you with all your financial needs. If you would like to have a no obligation chat with one of our experienced mortgage advisers, click here.

Your home may be repossessed if you do not keep up repayments on your mortgage or secured loan.

Calculations made based on a total borrowing of £250,000 on a repayment 30-year mortgage deal, with interest rates of 3.5% and 4% to produce monthly repayment examples at these rates to find the possible difference today’s announcement may make. Calculations are not deals available on the mortgage market and are for exemplar purposes only.

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