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What has happened?

On Thursday 16th December, the Monetary Policy Committee (MPC) voted to increase the Bank of England (BoE) base rate from 0.1% to 0.25%, the first rise in more than three years.

As mentioned in our previous newsletter, the BoE base rate is important because it can impact on the interest rates charged by retail banks on lending or offered as returns to savers.

Why did the base rate rise?

The base rate is the MPC’s primary mechanism for controlling inflation, which they are targeted to keep at around 2%.

There have been many reports that suggest that inflation was heading towards 6% and I am sure that many of us have seen this in the recent increase in prices of groceries, fuel and travel and a general increase in the cost of living.

By increasing the base rate, the MPC is looking to curb this increase in inflation and stabilise the prices of essential goods and services, by encouraging the public to save more and spend less.

What does this mean for you and your mortgage?

If you are on a fixed rate product than your current mortgage product and therefore mortgage payments will remain unaffected. If you current fixed rate is due to expire shortly, you should speak to someone to ensure you are reviewing your options early as these may change.

If you are on a tracker rate product then you will see a rise in the interest rate applicable to your mortgage, hence your monthly payment will also rise. Your lender should write to you shortly to confirm the exact details. You may wish to look to fix your mortgage product to ensure that you are protected from additional rate rises.

As always, if you are concerned or would like more information about how this impacts you then please get in contact.

Interest Rate UK Mortgage

Interest Rate UK Mortgage

For more information, get in touch.

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