Bank of England raises rate to 0.75 per cent in August
The interest rate is now at 0.75%, the highest level since March 2009. Bank of England’s MPC had been expected to increase the rate in May. Unfortunately, the economy only grew by 0.1% in the first quarter, which didn’t allow for this increase. The horrendously bad weather conditions were partly responsible for this lack of growth. The decision has now been made, with all nine Bank of England policy makers voting unanimously for change.
This rise, following a rise in November 2017, is only the second rate rise since the crash in 2008. Mark Carney the Bank’s governor, has said ‘rates can be expected to rise gradually. Policy needs to walk, not run, to stand still.’
How does this affect mortgage holders in E3 and London in general?
With approximately 70% of mortgage holders on fixed rate mortgages this will mean no change for them. For customers on variable or tracker mortgages however, a rise in payment will happen. An extra 0.25% will add £24 per month to a £200,000 mortgage. As mentioned above, rates are expected to rise further. On the whole, it may be time to talk to your financial institution and get the best deal possible.
What will this rise in rates mean for property prices in Bow and E3?
There has been a lot of uncertainty of late with regards to the prices of property for sale in London. Brexit negotiations are still up in the air so nothing is bound and determined. What is being forecast is a slight decline in prices over the next couple of years with Brexit and interest rises being the combined reason given.
The good news from Bank of England is that although they are predicting rises in interest rates they are not setting them in stone. According to Mr. Carney, ‘In those scenarios where the interest rate should be lower, well then the MPC which meets eight times a year would, I’m confident, take the right decision to adjust interest rates at that time.’ Let’s hope so.
If you feel now is the time to act, give our agents in Bow a call, they may have the perfect opportunity for you.