At the Bank of England’s Monetary Policy Committee meeting on the 7th February, the decision was made unanimously to hold the base rate at 0.5%. However, the minutes from the committee meeting do suggest that we are on the verge of seeing a quicker and sharper rise in interest rates than had previously been considered likely.
Mark Carney, the Governor of the Bank of England discussing inflation said “In order to bring it back to target over a more conventional horizon, which means moving it in from that three year horizon that it will be necessary, likely to be necessary, to raise interest rates to a limited degree in a gradual process but somewhat earlier and to a somewhat greater extent than we thought in November.”
An interesting point to note from the Committees minutes were that ‘inflation running above 2% for the next three years was something they were no longer prepared to tolerate’.
The Bank of England is always very clear and precise in the wording of its statements and never says a single word out of place. Everything here gives a knowing nod to a potential rise in interest rates with economists suggesting the first of which could be as early as May when the next inflation report is due.
As such now may be an excellent time to start planning your finances around potentially higher mortgage payments if you still have a variable rate mortgage, or perhaps consider the viability of a fixed rate product to secure a good rate whilst they are still available.
You may have to pay an early repayment charge to your existing lender if you re-mortgage