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Inflation targets are set by the Bank of England, their target rate is 2% per annum. Now that we have levels of inflation at 10%, the Bank of England is using Base Rate increases as its tool to cool rising inflation. These increase then increase the cost of new mortgages and existing Base Rate tracker rates. Existing fixed rate mortgages are not affected. We beleive that inflation is peaking and when global pressures ease, such as the war in Ukraine and shipping constraints, then inflation will fall. Should inflation fall to its target level and an economic recession bite then the Bank of England could lower Base Rate to stimulate economic growth. For the short term we think mortgage rates will continue to rise, although not as fast as they have been.

History has a habit of repeating itself. If we look at the inflation charts over the last 50 years whenever inflation peaks at high levels, interest rates rise to try and combat it. If we then cross-reference this with the history of house prices they soon come crashing back down after. Most could be quietly confident on what will follow for us soon in the housing market. I've no doubt Inflation will continue to rise throughout the rest of the year, yesterday saw fuel prices hit a record level and then we've got the energy cap increase later this year. These combined are going to push the cost up of most items along the way. Overpaying is always wise in my eyes, with most mortgages interest is calculated daily so the sooner you can start chipping away at the debt levels its going to save you interest in the long run. However, we appreciate not everyone is going to have the surplus money to do this with the cost of living crisis spiraling. In recent years we've become spoilt with record low interest rates, but sadly they've changed in a blink of an eye and we've seen some big increases vs what we have become accustomed to. There is a lot of fear that they will continue to rise throughout 2022 which has created a higher urgency for customers to review their circumstances and seek advice from an expert on what to do next.

To keep it simple, as inflation rises the bank of england base rate has a tendancy to follow, if base rate increases as does lenders SVR and inevitiably so do interest rates. As interest rates rise the market tends to slow down, as the market slows property prices will decrease as the higher rates bring less demand. Will the market fall off a cliff, no Will it slow, quite possibly, our best advice is to get yourself on a fixed rate sooner rather than later so then for the next 2, 5, 10 years you do not have to worry about the movement of interest rates.

The only real tool that is available to control inflation is interest rate increases through the Bank of England so with inflation so high I would expect to see interest rates continue to increase. With this in mind I feel that inflation will continue to increase and therefore rates will continue to increase along with that. I do however feel that this will be a correction in the house prices due to how steeply they increased recently and I predict that whilst we will see the increases level off I don't expect to see a dip in house prices.