Home Mortgage Interest rates: Mortgage-holders react to news of freeze

Interest rates: Mortgage-holders react to news of freeze

by Joshua Garcia

The Bank of England has held interest rates at 5.25%, the highest it’s been in 15 years, following 14 consecutive rises. This decision comes as a relief to many homeowners who have been struggling to cope with the increased rates. However, there is still anxiety among homeowners, as mortgages are set to become more expensive in the coming months.

One homeowner, Nicola Valentine, who bought her first home nearly two years ago on a fixed-rate mortgage deal, is feeling the effects of the rising interest rates. Her mortgage is due to go up by about £300 a month, which is causing her significant financial strain. She has cut out unnecessary expenses and is considering taking in a lodger to help cover the additional cost. However, she is hopeful that interest rates will start to go down in the next few years, though she acknowledges that it’s a risky gamble.

Another homeowner, Richard, has already felt the impact of increased interest payments. His fixed-rate mortgage ended earlier this year, and he is now on a tracker mortgage, increasing his monthly interest payments from £260 to £807. He describes each interest rate hike as a “knife in the back” and believes that the Bank of England should have reduced rates instead. He also argues that these rate hikes make it difficult for homeowners to keep up with mortgage payments without a pay increase.

The Bank of England has been raising interest rates in an attempt to tackle inflation in the UK, which currently stands at 6.7%, far above its 2% target. The Bank hoped that higher interest rates would encourage households to save rather than borrow money. However, some financial experts argue that further rate hikes could lead to a recession. The decision to hold rates may not mean that rate rises are over, as the governor of the Bank of England has hinted that rates are unlikely to fall anytime soon.

For many homeowners, the decision to hold interest rates brings temporary relief, but the future remains uncertain. Homeowners like Rachelle Gleed are hoping for rates to start going down and stabilize at 3 to 4%. Gleed, a landlord with an interest-only mortgage deal that is ending next month, is facing an extra £1,000 a month in mortgage costs. She is unable to pass this cost onto her tenants and is tightening her belt to weather the storm. She is also worrying about the mortgage on her own home, which will increase by around £900 a month once her current fixed deal ends.

Overall, homeowners are experiencing increased financial strain due to rising interest rates. While the decision to hold rates provides temporary relief, the future remains uncertain. Homeowners are tightening their belts and hoping for rates to start going down in the near future.

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