• With inflation running high, the Bank of England increased its base rate to 1.25% in June, with another 0.5 percentage point rise forecast before the end of 2022 and potential for a further 0.25 percentage point rise in 2023.
  • The typical margin between mortgage rates and the bank rate (1.5 percentage points over the last year) suggests the average new lending mortgage rates will be over 3% by the end of 2022.
  • The vast majority of new mortgage borrowers are on fixed rates (representing 92% of new loans over the last 5 years) offering protection from rising payments, at least until the fixed term expires.
  • House prices are largely driven by what people can borrow and at what cost, so with rising rates this does start to drive affordability the wrong way.
  • Source: Dataloft, Bank of England HM Treasury Consensus Forecasts June 2022

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Dan Hopkins

Working with property professionals for over 20 years providing advice and services to all property investors.

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