Mortgages.scot

As anticipated the Bank of England increased the base rate to 4% from 3.5%, an increase of 0.5%. There was lots of speculation about how far they would go but few believed it was going to be anything positive! Perhaps we are nearly there though in terms of more increases, perhaps!

The voting

There was a full committee of 10 for the vote. 8 voted to increase by 0.5% and 2 votes to maintain at 3.5%.

Inflation is a key driver here. But we are seeing that turn a little. The Consumer Price Index (CPI) peaked at 11.1% in Oct last year. It fell to 10.7% in Nov then again to 10.5% in Dec. It is expected to decrease slightly although some are predicting an increase due to recent increases due to food, non-alcoholic drinks, tech and other costs such as mobile and broadband costs. We will find out more on the 16th Feb.

Unfortunately, the lowest earners continue to suffer the most due to increased costs of the basics, food which increased by 17% in December 2022. And then there is the cost of Gas and electricity which are currently running at 34p per KWh for electricity and 10.3p kWh for gas.

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.

• NatWest is offering 4.04% for a 2 year tracker.
• Newcastle has a 4.45% fixed for 2 years.
• Co-Op has a 4.29% fixed for 5 years.

Still a long way from the 1.15% rates seen just over a year ago but better than the 6-7% we were seeing just a few months back.

Outlook

Once we see how inflation looks next week it is hoped it will encourage the Bank of England to slow rate rises. If I was a prediction type of person I am expecting a further 0.25% increase next time and if inflation continues to fall rates will start to get held around 4.25%. But we could see it move higher, unfortunately, there are many changeable factors and it's no longer that easy to predict too far in advance.

The pain is still not over yet!