Pierre Blampied, Managing Director at SPF Private Clients, says that the recent interest rate rise shouldn’t alarm islanders.
Last week saw the Bank of England increase rates from 0.1% to 0.25%. This is in direct response to rising inflation figures, coming the day after it was announced that the official rate of inflation had hit 5.1%.
Pierre (pictured) explains why this has happened and why he feels that local borrowers shouldn’t worry.
“We’ve known that an increase to the base rate has been ‘bubbling under’ for some time, but the decision yesterday was still largely unexpected as it was anticipated that the Bank of England might hold off due to the uncertainty over Omicron’s impact on the economy. However, they made the decision to try and slow price rises which are at their highest for 10 years.”
This is the first increase since August 2018 and what it means in real terms is that anyone on Tracker or Variable rate mortgages will see a slight increase in their monthly repayments as the mortgage rate will move in line with the base rate.
But Pierre is upbeat about the picture overall: “It will be interesting to see what impact the increase has on fixed rates, but pleasingly these remain at very low levels. At 95% loan to value borrowing we would expect little change, and don’t forget the aim of the base rate increase is to tackle inflation, slow price rises and ensure that we all have more money in our pockets. The local property market is buoyant, demand is high and I don’t see this as having a negative impact.”
