It’s only been a few working days since the government’s mini-budget hit the financial markets like a bad stink, which makes you wonder whether there will be any backtracking on any of the policies that were announced.
The Bank of England has issued a statement saying it’s prepared to decisively raise interest rates to boost the value of sterling and curb inflation.
Traders are pricing in the Bank of England increasing the base rate to 5.5% next year, which would vastly increase the cost of mortgages.
The Bank of England has increased the base rate by 0.50% for the second successive month, bringing it to 2.25%.
Interest rate rises and soaring bills are causing concern among borrowers worried whether they will be able to afford their mortgages.
The Monetary Policy Committee is expected to hike the base rate by 0.50% next Thursday, despite suggestions that a steeper 0.75% increase could be put in place instead.
House prices swelled by 0.8% in August, but Nationwide said there are signs the housing market is finally starting to lose momentum.
Property prices will fall for the rest of 2022 and over the course of 2023, reversing some of the post-pandemic gains, according to Ray Boulger, senior technical manager of John Charcol.
Mortgage lending fell between June and July, potentially spelling the beginning of a slowdown in activity following successive increases to the Bank of England base rate.
Mortgages fixed for two years now average a rate above 4% thanks to successive base rate rises by the Bank of England.
