The Bank of England voted to increase rates by 0.25 percent by a majority of 6 votes in favor to 3 against. PAID CONTENTJoin us on a tour of The Macallan EstateThe Bank said Thursday’s hike was needed to reign in rampant inflation, which hit seven per cent in March and is now expected to have reach nine per cent in April when the cap on energy bills rose 54 per cent, and peak at 10 per cent in the Autumn.But it will mean a major extra burden for homeowners and businesses at a time when they are already grappling with surging energy, fuel and food prices.The Bank also sharply downgraded its forecasts for economic growth with a contraction of 0.25 per cent now expected in 2023 as a result of the disruption caused by the Ukraine war.The Bank of England move will trigger an immediate rise in housing costs for the roughly one in four home owning households with tracker, discount or variable rate mortgages that move in line with the Bank of England’s base rate.For a homeowner with a typical London 25 year mortgage of GBP250,000 it wil lift the monthly bill by around GBP35 from GBP1,353 to GBP1388. A borrower with a larger GBP500,000 mortgage will see their monthly payments rise by around GBP35 from GBP1,353 to GBP1388. It began rising in December, when it rose to 0.25 percent. It rose to 0.25 percent in December. Borrowers who have only a 10% deposit can lock in 2.49 percent with First Direct. Sarah Olney, a Liberal Democrat MP, said that Londoners would be “unfairly affected” by the latest rise in interest rates. This is due to an “out-of-control housing market” in London. She also said that it could double your mortgage interest payments over a period of time. They need help right now, but all they get from the Government is tax hikes and empty promises. “I am urging the Chancellor to cut taxes and create a safety net for those families that can’t afford the mortgage increase. This Government cannot ignore the plight of homeowners on the edge. “Cory Askew is the head of sales at Chestertons. He says that despite the interest rate increases this year, the number buyers registering has only risen, most recently by 39% in April versus April 2021. The Bank of England has indicated a target Base rate of 1.5 percent by the middle of next Year, indicating yet another rate rise. This has only served to increase buyer motivation and urgency to purchase. “David Johnson is the managing director of INHOUS, an independent property consultancy. He says that homeowners will be affected by the latest in a series of interest rate increases. Many people we spoke to believe that a recession was inevitable. London’s interest rate hikes will affect those who bought in the last five to six years and paid a premium. The market was competitive with buyers paying high prices and needing finance. These homeowners could face financial difficulties in the future if interest rates rise again, but it is unlikely. It all depends on the type of finance they chose. If they choose a fixed-rate mortgage with a medium-term or longer term, they might be fine. However, if they opt for a variable rate, it could prove to be a difficult time.
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