As markets predict that interest rates could reach 6%, the Prime Minister instructs banks to protect mortgage customers.
As mortgage rates rise and the Bank of England appears certain to keep raising interest rates in an effort to tackle sticky inflation, Prime Minister Rishi Sunak has urged banks to defend mortgage clients.
The call from the prime minister comes as markets anticipate that rates will rise to at least 5.75% by year’s end and may potentially exceed 6% for the first time since early 2001.
According to a statement made by a Prime Minister’s spokesperson quoted in The Telegraph, “The Chancellor has made clear his expectation that lenders should live up to their responsibilities and support any mortgage borrowers who are finding it tough right now.”
The representative continued, “There are still a lot of different mortgage deals available.”
While some economists are calling for a massive hike in the base rate, others are being more circumspect. According to Pantheon Macroeconomics, the Bank of England may be able to forgo raising interest rates in September depending on the state of the labour market.
It also thinks it might be able to stop raising interest rates altogether in November, setting them at 5%.
In the near term, the Bank is poised to raise rates on June 22 from 4.5% to at least 4.75%.
The Federal Reserve, the American counterpart to the Bank of England, decided to forgo another hike this month.
The Fed is largely anticipated to forego another hike this month after raising interest rates ten times in a row to 5.25%. However, at 4%, inflation is far less than it is in the UK.
On June 22nd, the Bank of England will announce its decision about interest rates.
Do you need Mortgage Advice?
If your mortgage product is coming to an end anytime in the next 6 months it may be wise to talk to us to discuss plans for your mortgage to ensure you get the best available deal.
The rates are the highest they have been in a long time, and with them still rising you need professional advice on your mortgage.
Please call us or get in touch to see how we can help you.
