The Bank of England’s Monetary Policy Committee (MPC) has announced interest rates will rise for the fifth consecutive month, by 0.25 percentage points to 1.25%.
The MPC voted by a majority of 6-3 to increase Bank Rate by 0.25 percentage points, to 1.25%. Those members in the minority preferred to increase Bank Rate by 0.5 percentage points, to 1.5%.
The increase was made in an attempt to control increasing inflation. The Bank said that not all of the excess inflation can be attributed to global events. There has also been a role for interactions with domestic factors, including the tight labour market and the pricing strategies of firms. Consumer services price inflation, which is more influenced by domestic costs than goods price inflation, has strengthened in recent months. In addition, core consumer goods price inflation is higher in the United Kingdom than in the euro area and in the United States.
CPI inflation is expected to be over 9% during the next few months and to rise to slightly above 11% in October. The increase in October reflects higher projected household energy prices following a prospective additional large increase in the Ofgem price cap.
Kevin Webb, managing director, Legal & General Surveying Services, said “The Bank of England’s latest decision to raise the base rate will have an impact on the UK property market. Repayments will rise for those on tracker mortgages and others who need to find a new fixed rate product. A rise in rates could also threaten to put the brakes on the housing market’s growth, as prospective homeowners trying to step onto the ladder decide instead to hold off buying and try to balance the books during a time when the cost of living is going up.
“For those planning to buy a home, it is likely to be the single biggest transaction they make during their lifetime, and they will naturally want to ensure they are as comfortable as they can be when making the purchase. Today’s news makes it all the more important to seek the expertise of surveyors, who can give immense value and reassurance to homebuyers.”
