It is going to hit everybody on a variable rate hard - Comment on the BoE base rate rise from Simon Webb at LiveMore Capital

04 August 2022

Simon Webb, managing director of capital markets and finance, says “Today’s rise is the largest rise in base rate since 1995. While still low by historic standards, it is going to hit everybody on a variable rate hard, and is likely to create more mortgage prisoners as, despite the cancellation of stress testing, many people will be forced to pay a lender’s SVR because they can no longer meet the affordability tests to move to a different lender. Older borrowers could well be hit particularly hard. If ever there was a time to switch to a long term fixed rate it is now, as interest rates look likely to rise for some time yet, with interest rates expected to hit 3% potentially by the end of this year. We also expect the demand for interest only mortgages to increase in order to help make mortgage payments more affordable.”