By using this website, you agree to our use of cookies to enhance your experience.


'Like a lump of coal at Christmas’ – Agents react to latest interest rate rise

The Bank of England increased interest rates from 3% to 3.5% yesterday, potentially pushing up costs for those looking to purchase property with a mortgage in the near future.

The ninth consecutive increase puts the cost of borrowing figure at a 14-year high.

Rachel Springall, finance expert at comparison website Moneyfacts.co.uk, said this latest base rate rise will be disappointing news to borrowers who are already facing a cost of living crisis and recent turmoil surrounding mortgage interest rates. 


It comes as mortgage rates have actually been falling in recent weeks but remain higher than earlier this year.

Springall said: “Whether now is the time to grab a new deal depends entirely on someone’s circumstances. 

“As fixed rates are expected to come down further, borrowers may wish to wait and see what the next few weeks will bring. However, those who are sitting on a standard variable rate (SVR) may wish to note the impact the base rate rises will have on their repayments.

“Since December 2021, the average SVR has risen by 2% and, as lenders are traditionally quick to pass on base rate rises, it will impact on someone’s monthly repayments. A rise of 0.50% on the current average SVR of 6.40% would add approximately £1,509 onto total repayments over two years.”

Springall added that first-time buyers may feel disheartened about their chances of finding an affordable property considering the cost of living crisis, adding: “When it comes down to applying for a mortgage, it’s always worth seeking advice to go through the options first, particularly if borrowers have a limited 5% deposit.”

Marc von Grundherr, director of Benham and Reeves, said: “This will be as welcomed by homeowners as the proverbial lump of coal on Christmas morning, with those on variable rate products now facing yet another immediate increase in their monthly mortgage payments. 

“With many households struggling to heat their homes in these arctic conditions, this will be the last thing they need in the run up to Christmas.”

Managing director of Barrows and Forrester, James Forrester, added: “While a Christmas interest rate increase is as desirable as a pair of socks from your aunty, the silver lining to the latest hike is that this should hopefully be the peak, with less chance of a further increase on the cards for 2023. 

“Should this be the case, the New Year should bring a far more settled outlook for the UK property market, as we adjust to a new normal following a turbulent few months.”


Please login to comment

MovePal MovePal MovePal
sign up