Mortgage Update: Bank of England Base Rate rise to 4.25%

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The Bank of England has raised rates by 0.25% to 4.25% to combat inflation. The Bank of England’s target is to reduce inflation down to 2%, which helps sustain growth and employment.

The rise of CPI (Consumer Price Index) inflation to 10.4% in February up from 10.1% in January saw the Bank opting for a rate rise to combat this. The CPI inflation in February was mainly due to an unpredicted rise in food and clothing costs, however we do not think this will persist and should mean that CPI inflation reduces in the coming months.

The next meeting in May will determine whether a further rate rise is required or if enough has been done to push the CPI inflation rate down.


What does this mean for your mortgage?

With the base rate now at 4.25% many of our clients are asking us about the impact that this may have on their mortgage. For those on fixed rates, nothing will change but if your initial mortgage rate is coming to an end this year then it would be an ideal time This email address is being protected from spambots. You need JavaScript enabled to view it. to assess the impact of the rate increases and the options you have. These options include increasing the mortgage term or potentially placing some of the mortgage on an interest only basis.

For those on tracker rate mortgages, you would have seen payments rise quite substantially since December 2021 and the raised rates will further increase the payments. If you are on the standard variable rate then our advice would be to assess all of your options as you may be able to move with your current lender onto something just as flexible but considerably cheaper.

Residential leading rates

The Buy-to-Let market for landlords has continued to prove challenging. The stress test rates, which lenders use in the background, have proved very restrictive which has resulted in many landlords being stuck on the lender’s standard variable rate or the decision to sell up. There is some light at the end of the tunnel as many lenders are now looking for ways to help landlords and offer products that have proved restrictive in the past.

Current Buy to Let leading rates

If you would like to discuss how to get the best deal, contact the Connaught Private Finance team on 0203 805 3035 or email This email address is being protected from spambots. You need JavaScript enabled to view it.

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