It’s been a tumultuous few weeks for Britain and the financial market, but the Pound rallied on Thursday after the Bank of England’s Monetary Policy Committee (MPC) voted on the interest rate. Economists had expected the MPC to vote strongly in favour of maintaining the interest rate, but in reality, the vote was far from unanimous, with a 5-3 split.
A rise in the number of policymakers supporting an interest rate hike has caused the markets to reconsider their stance on when they think the Bank will raise interest rates, with some predicting a rate rise in just a few months.
The Federal Reserve has also recently raised interest rates for the second time this year. Historically, central bank rates move in tandem, which is further evidence that a UK rate hike may be on the horizon.
An historically low rate of 0.25% has been maintained by the Bank of England since the Brexit referendum. However, rising inflation is becoming a serious concern for the MPC—and the country as a whole. Prices are generally considered to have risen because of Sterling’s decline after the Brexit referendum; the weak Pound has increased the price of imported goods coming into the country.
An interest rate rise could help to dampen inflation, as the increased cost of borrowing encourages people to save more and spend less.
So what does this mean for the property market?
The market is tentative at the moment, but a potential interest rate rise could motivate some action. If rates do rise, borrowing will become more expensive.If you’re currently considering remortgaging, now may be the time to strike and lock in a low fixed-rate mortgage. There are currently some excellent low mortgage rates available, and remortgaging onto a low rate now could save you considerable sums over the next few years.
If you’d like a further discussion on how we can help you remortgage at an excellent rate, get in contact today.