Cost of living: Why Bank of England has increased interest rates
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The central bank raised the base rate for the fifth time in recent months, to a record 0.5 percent, in efforts to tackle surging inflation. Express.co.uk readers have reacted to predictions that some 850,000 people on tracker mortgages face an immediate financial hit after the rate hike.
Many spoke about their previous experiences paying off their mortgages, saying that new home owners should be careful with their finances.
BrueTrit said: “Now mortgage free with two properties and not too worried about the interest rates now, I saved a bit for later in life.
“Youngsters will have to be more careful with their money and learn from us who have been more thrifty.”
Analysis by the Liberal Democrats found that of the 2.1 million mortgage holders in London and the South-East, some 27 percent have fixed-rate mortgages set to expire in less than two years.
The party’s Treasury spokeswoman, Sarah Olney, said: “This is a hammer blow to homeowners who are already struggling to keep up with sky-rocketing bills.”
Express.co.uk reader Yada yada had little sympathy for those homeowners who would be affected.
They said: “A majority of these homeowners have had cheap money for years and they should have paid more off of their loan, do I feel sorry for these people no.
“Cheap money does not last for ever and debt has no principles it does not care, remember it was your choice to get into debt.”
Johnboy999 said the rate hike was a “smile rise” compared to what they had to deal with paying off their mortgage in the past.
They said: “In the early 1980s ours went up from 8 percent to 17.5 percent. We managed.”
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Others said that the increase would be a welcome boost for pensioners.
Norfolkbump said: “On the other side of the coin, pensioners who had saved carefully over the years and now have a few quid in the bank and looked forward to the interest topping up their pensions a little, have suffered austerity and rock-bottom interest rates since 2008. “Now, they might look forward to a little higher income.”
Bank of England bosses have predicted that inflation will peak at 13 percent as energy prices continue to surge going into the winter months.
The bank’s Monetary Policy Committee said: “The United Kingdom is now projected to enter recession from the fourth quarter of this year.
“Real household post-tax income is projected to fall sharply in 2022 and 2023, while consumption growth turns negative.”
Express.co.uk reader Bye and thanks for all the fish warned that there will be bleak financial times ahead.
They said: “Next comes the property price crash as hundreds of thousands default on their mortgage repayments, as the banks flood the market with cut price property to recoup their losses, then thousands of people are saddled with debt on property they no longer own.
“Seen it all before.”
Cecilia Mourain, managing director for Homebuying at app-based savings group Moneybox, urged first time buyers to ensure they are getting the best deal on their mortgage.
She said: “Since the start of the year we’ve seen lenders pull their popular mortgage deals at short notice, so it’s more important than ever first time buyers consider working with an informed and trusted broker who can secure the best rate in the shortest timeframe possible.
“The recent succession of base rate rises can seem daunting – especially for first time buyers – but we need to keep it in context.
“Rates declined sharply in 2020 and remain in line with the past 10 year average.
“Where possible, aspiring homeowners need to dissociate as much as possible from what’s happening in the very short term, and try to focus on the long term benefits of home ownership.
“There will always be periods of recessions and then periods of growth, the key is to be in it for the long term.”
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