The Bank of England has raised the base rate to 0.5 per cent, the first time a rise has been seen for 10 years.
In response, there was a mixed reaction from the mortgage industry but for the most part, the rate rise is viewed as ‘a return to normal’, and brokers are recommended to contact clients without delay to combat any concerns.
Here is some of the earliest commentary received by Mortgage Strategy.
“This interest rate rise is the inevitable correction we have been expecting. 0.5 per cent is where the base rate had held for 9 years, so there is no need for consumers to be alarmed by today’s increase.”
“Despite this being the first rate rise in almost a decade, it should be seen more as a return to the ‘new normal’ for consumers. Anyone worried about what this means for their mortgage payments should get in touch with a mortgage broker, who will be able to discuss how this will impact them personally and what steps, if any, they need to take next.”
Legal and General director Jeremy Duncombe
“There’s no denying that an interest rate rise is going to be a daunting prospect for many homeowners who are on a variable rate tracker or standard variable rate. This will be especially true for those who have recently got onto the housing ladder. Advisers must use this as an opportunity to get in contact with their clients – both those looking to secure a mortgage and those who already have one. For borrowers approaching the end of their fixed terms and those on trackers, now is the time to look at potential remortgage deals which could offer the safety of a longer term fixed rate.”
TMA director David Copland
“A fair adjustment to interest rates and one that takes us back to the pre-referendum ‘norm’ of 0.5 per cent. This should do little to phase homeowners and buyers on variable rates with the average homeowner out of pocket an extra £16 or so a month, and water off a duck’s back for those with a fixed rate security blanket.
While the wider economy to some extent has been comatose since the Brexit vote, it has started to show signs of life in terms of manufacturing and employment which should continue to build.
Where the UK property market is concerned, there is certainly no cause for panic as we are unlikely to see any further adjustments too soon down the line and it is very unlikely that we will return to the extraordinary highs of the late 80s, when many fell into a financial black hole.
For UK Property PLC, today’s announcement should be met with a distinctly apathetic approach. There’s nothing to see here.”
eMoov chief executive Russell Quirk
“Considering the recent rate rise speculation, today’s announcement hardly comes as a shock. For those who have stepped onto the housing ladder in the last nine years, however, this will be the first time they experience a rate-rise as a homeowner.
“With Bank of England data showing consumer debt has grown by nearly 10% year-on-year, even a small increase in monthly outgoings could be the tipping point for some borrowers. This is especially true for those who have irregular income streams, such as contractors, entrepreneurs or self-employed workers. These individuals are also more likely to be rejected by high-street banks, due to outdated forms of credit scoring. As the UK economy and employment landscape changes, more needs to be done to give these key members of the UK workforce access to the financial products they deserve.”
Bluestone Mortgages director of sales and distribution Steve Seal
“While it could be a while before we see another increase, the first rate rise in a decade is the perfect time for everyone with debt to review their exposure and consider their options.
“People with debt should take pre-emptive action to ensure long-term affordability and review their ability to keep up repayments.
“The cheapest mortgage rates ever seen are now starting to disappear, so if anyone is considering remortgaging they might want to act, and soon.
“In the months ahead we are likely to see more and more households consolidate the debts they have taken on, either through a remortgage or, if that is not appropriate or possible, a secured loan.
“Thankfully, as well as having competitive rates, many secured loans today have no early repayment charges, making them a genuine alternative for people looking to take control of their finances at a time of rising interest rates.”
Thistle Finance managing director Mark Dyason