Base Rate UP – how will it affect the housing market?

The Bank of England has raised the base rate from 0.25 per cent to 0.5 per cent.

The Bank’s monetary policy committee was split seven to two.

Mortgage lenders are now expected to follow suit with small increases to their lending rates.

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The increase has already been factored into mortgage pricing, with most lenders hiking the cost of their fixed-rate deals over the past couple of weeks.

“However, we don’t believe it is the end of cheap mortgages with Nationwide actually cutting its fixed rates this week, illustrating the ultra-competitiveness of the market. Some lenders may well be prepared to absorb rate increases into their margins, as they are still chasing business. The plethora of new lenders has also led to increased competition in the mortgage market, which is good news for borrowers.”

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