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Evening Standard lead story tomorrow - broker comments on base rate going up to 5.5%

ended 05. June 2023

The Evening Standard is planning to lead with the following story - thousands of Londoners face shocking mortgage bill increases of up to £8,000 a year when they refinance if the base rate goes up to 5.5% as forecast. This will mean a lot of pain for a lot of people.

They would like comment from brokers (London area ideally) to go with this story - also, is there anything homeowners could be doing to reduce the shock?

8 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
It makes no logical sense for rates to increase further than current levels. They have zero effect on inflation that isn’t caused by increased demand. The Bank of England are impotent to control inflation, and persisting with this ludicrous course of action is just going to devastate many homeowners, especially those with larger mortgages most likely seen in the capital. The latest figures on mortgage approvals should be evidence of the negative effect rate hikes is having, and the government need to consider their confidence in the governor if he persists with a sadistic policy doomed to fail.
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Craig Fish
Director at Lodestone Mortgages
Regardless of any further base rate increases London homeowners are already facing shocking increases in their mortgage payments. Just this week I have been talking to one of my clients whose payments are going to increase from around £2000 per month to over £8000, and that is when taking the lowest rate currently available, which is below the current base rate. The MPC has already shown that they have the wrong tactics as inflation isn't dropping as quickly as hoped, so why continue down the same path when it clearly doesn't work? They need to stop these pointless increases. If anyone is worried about these rising costs they should reach out to their lender or broker without delay as there are things that can be done, but delaying communication is not going to help. The sooner clients reach out the better, that way we have more time to plan a suitable route to bettering a bad situation.
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Riz Malik
Independent Financial Adviser at R3 Wealth
An increase in the base rate to 5.5% will exacerbate mortgage arrears and prompt further declines in house prices. There is a collective hope that the Bank of England will realise its decisions might be causing more harm than good to the UK economy and halt the increases. If it does not, Londoners should review their mortgage arrangements sooner rather than later if they are coming up to renewal.
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Justin Moy
Managing Director at EHF Mortgages
Increasing Mortgage Rates is obviously not working in this quest to reduce inflation. There are too many other causes that need more urgent support, such as food and fuel costs, where increasing mortgage rates only makes those essential items cost more - it is a self-fulfilling spiral that will ultimately bankrupt the country, as well as the poor homeowners choking on their cornflakes this morning whilst reading these headlines. This last week of extraordinary rate increases, increases of as much as 0.85%, will easily add over £3000 extra interest to a £200,000 mortgage over the next 2 years - the government need to act fast on this, and look at the real cause of inflation, and not penalise homeowners and landlords any further.
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Graham Cox
Director at Bridging Hub
Anyone worried about their mortgage costs after refinancing should speak to their existing lender as they may be able to extend the mortgage term, or allow a period of interest-only payments.

If you have the means, overpaying your mortgage to reduce the debt can help, particularly if the extra equity means you can qualify for a lower loan-to-value product
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Adam Smith
Founder at Alfa Mortgages
If mortgage payments increase due to a rise in the Bank of England's base rate, it will certainly be less than ideal. Nevertheless, it's important to remember that we have enjoyed a decade of ultra-low interest rates, and what we're experiencing now is simply a return to a more normal interest rate environment.
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Amit Patel
Adviser at Trinity Finance
What planet do the Monetary Policy Committee members live on? By increasing the base rate further, they are going to hurt both homeowners and renters. They don't appear to have any awareness of the real world. They are hellbent on making life a misery and a struggle for millions of people. Its members are all from similar backgrounds and their thought process and thinking are the same. We need a more diverse membership of the MPC rather than recruiting people from an ex-banking background.
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Gary Bush
Financial Adviser at MortgageShop.com
I can see no logical sense for the Bank of England in their next meeting on 22nd June to increase the base rate by a whole 1% - if they were that unsure that the recent increases were having no effect they would have opted for a .5% last month, rather than the .25%. With the stubborn inflation rate now showing signs of decreasing I find it more likely for the Monetary Committee to rest as we are and see what the next inflation figure shows us, however, the timing of the next release of inflationary data might decide for them on 21st June.