The Bank of England monetary policy committee kept homeowners onside this week when they decided to retain the base rate at 0.5%. It is widely agreed within the marketplace that it is a matter of when but not if the rate will ultimately rise. Although last month’s decision to hold rates was not unanimous, the incoming economic news over the past month has not been strong enough to support a change in view from last month.
Inflation fell again in July, to 1.6%, still below the 2% target. This low inflation provides scope for the MPC to hold rates at their current level for a while longer.
New research published this week has found that almost half of all UK mortgage holders (42%) are unaware of their current mortgage rate. Furthermore, over a third (38%) are surprised to learn that if the base rate rises by just 1%, it could add £91 to the average UK variable mortgage payment
A study by Equifax suggested that 50% of UK homeowners would struggle if the basic rate increased by 1%.
Woolwich this week have released online mortgage calculator that allows you to work out what would happen if the base rate would to increase you can look at the calculator by clicking here