The Bank of England has been slammed for raising the base rate, bringing it back to its highest level since before the pandemic.
The rate hiked from 0.50% in order to deal with rising inflation, as the Bank warned that it will likely hit 7.25% by April.
However, Miranda Khadr, founder and chief executive at Pitch 4 Finance, said: “I think it is irresponsible for the Monetary Policy Committee to raise the base rate this month, despite the rise in inflation.
“The cost of essential day-to-day to living requirements such as food, gas and electricity, have been going up and more people are struggling to get by. There are too many things happening at once for rates to go up now. If you add in tax hikes that are due soon and higher interest rates people’s finances will suffer even more.
“Not everyone is shielded by a fixed rate, especially those with commercial mortgages. SME property developers have had to deal with rising costs of materials and labour so adding in higher mortgage payments will be a blow to them. It will lead to higher house prices and push more first-time buyers and upsizers out of the market.
“Rising debt is also a worry with Bank of England data released this week showing annual credit card debt increasing by 2% in December. Other forms of consumer credit such as car and personal loans were up by 1.1%. Raising interest rates will only add to this.”
However most other commentators seem less worried about the impact of this rate rise.
Simon Jackson, chief executive officer at Mortgage & Surveying Services, said: “The housing market remains in good shape and should be able to withstand measured and proportionate rises in interest rates.
“Given the inflationary headwinds facing the economy, the direction of travel for interest rates is clear.
“However, for the majority of homeowners interest rates will remain at historically low levels and comfortably less than the affordability level tested by their lender at application.”