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The Bank of England has raised their interest rates from 4% to 4.25%—the 11th consecutive hike after yesterday’s shock rise in inflation.
The rise in interest rates would negatively impact borrowers and those on tracker mortgages.
When interest rates rise, more than 1.4 million people on tracker and variable rate deals usually see an immediate increase in their monthly payments. The 0.25% increase means those on a typical tracker mortgage should pay about £24 more monthly. Those on standard variable rate mortgages would face a £15 jump.
A great example is people on a tracker, or variable rate mortgage will automatically see that get passed on. If you have £250,000 of borrowing, you will pay an extra £35 a month.
It’s not just homeowners that are affected by today’s increase. With interest rates increasing, we will see many landlords dipping into their own pockets to be able to pay the tax each year simply because the higher interest rates will eat into their cash flow. Some will likely pass on the cost to their tenants.
Some property experts are forecasting some property owners will sell up as they cannot afford the increased taxes and higher interest rates on their properties. We’re already seeing this trend for single-home or small-portfolio landlords.
We’ll be keeping our eyes peeled over the news and data ahead of May’s review.
If you think Hoowla can help you and your clients after today’s announcement get in touch with our friendly support team.