LiveMore comments on base rate announcement

15 December 2022

Simon Webb, managing director of capital markets and finance at LiveMore, commented: “The last time the base rate was 3.5% was almost two decades ago in July 2003. The impact of the ninth consecutive rise will mean that around half of owner occupier mortgages, equating to about four million home loans, will face rate increases over the next year. This is according to the Bank of England’s Financial Policy Committee (FPC).

“Add on the rise in the cost of living and real incomes falling due to high inflation, it will be tough for many people. On a more positive note, the FPC also said households are better placed now than at the start of previous recessions, i.e. the global financial crisis in 2007 and the early 1990s recession.

“As rates are lower now than back then, the proportion of disposable income spent on mortgage payments, although set to rise, is less than the peaks of those two recessions. Also, lenders have more experience of forbearance for borrowers who are struggling.”