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No real surprise this month other than a slightly lower than anticipated rise. The Interest rate is now at 3.5%. At this point, we are seeing the highest rate in over 14 years. It was also the 9th increase in a row.

A change in direction at last?

Whilst the decision was still to increase the rate and that was expected, it was still predicted to be a higher increase at 0.75%. As you can see below there was only one vote for 0.75% and two voted to maintain the rate at 3%. It's a glimmer of hope.

What could be the result of a cooler approach to the rate rises? Likely a result of inflation starting to move downwards again. Not significantly, since October when CPI was at 11.1%, it reduced to 10.7 in November and there is an expectation this will drop further when the next figure is announced on the 15th of January 2023.

Wholesale cost of energy is down

The key drivers to the current high inflation remain energy costs along with rising food costs due to the increased cost of transportation resulting from higher fuel costs. Many other items are of course affected but those are seen as the main culprits.

Whilst we are not seeing it in our bills, wholesale prices for gas have dropped quite significantly. Tanks are pretty full resulting in reduced demand. Reports suggest wholesale prices have come down by around 23% for electricity and gas by 38%. Why are we not seeing that in our bills?

The big energy firms are staying pretty silent on why bills are not coming down. Ofgem the industry regulator has asked them to explain why but nothing has been heard so far.

Mortgage rates

Interest rates remain fairly stable at the moment. There are some good rates available, of course not as good as they were 12 months ago or more but those low rates are gone for some time.

• First Direct is offering 4.74% fixed for 2 years.
• First Direct also has a 4.39% fixed for 5 years.
• MPowered has a 4.74% fixed for 3 years.

Outlook

Are interest rate rises going to stop soon? Difficult to say and that will depend on where inflation moves to but I can only give a personal opinion having looked at various analyst views who in the past have proven themselves reliable.

Interest rates will continue to rise in 2023, the peak is anticipated at 4.75%. Although there may be pauses rather than the continuation of an increase at every MPC meeting.

What it does mean is a dampening of property prices. Various experts and analysts suggest a decline of 5% to 12% and a worst-case scenario of 15% to 20%.

The pain is not over yet, time will tell and we will start to get an idea of how 2023 is going to start once we see how inflation has moved on the 15th of January 2023.