Property expert says Bank of England and government aren’t “singing from the same hymn sheet”

By Chloe Shakesby   |   Property writer   |
Thursday 22nd September 2022 3:01 pm
@chloeshakesby
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The Bank of England is rising interest rates once again. (Tierra Mallorca on Unsplash )

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An estate agent has called for more co-operation between the government and the Bank of England after the announcement that interest rates will rise for the seventh time in a row.

Nicky Stevenson is managing director of estate agents Fine & Country - which has branches across Cornwall, including in Bude - and said the rise in interest rates signifies a disconnect between the government and the Bank of England.

She was commenting in the wake of the rates announcement, which sees rates rise from 1.75 per cent to 2.25 per cent and brings borrowing costs in the UK to their highest level since the recession in 2008.

Interest rates are firmly linked to mortgages, with the rates rise meaning that mortgages will be more expensive going forward, and that homeowners with existing mortgages will have higher monthly outgoing payments.

For those with a variable-rate mortgage, costs will be approximately £163 higher than they were at this time last year, while those with a fixed-rate deal won’t see this increase.

However, for those renewing their mortgage on a fixed-rate deal, the cost will be approximately two per cent higher than two years ago.

The rise in interest rates could also see rents rise, as landlords attempt to offset their rising costs by charging tenants more.

This comes after government officials have signalled that they are aiming to help boost economic growth by changing the tax system.

Nicky commented: “The Bank of England and the government don’t appear to be singing from the same hymn sheet.

“Rate-setters are taking money out of people’s pockets in an effort to cool the economy, while at the same time Liz Truss and her team are signposting their intention to radically overhaul the tax system in an effort to boost growth.

“While many forecasters are trimming their expectations for future house price gains following a series of interest rate hikes, the effects of this monetary tightening could well be mitigated by the cuts to stamp duty expected to be announced as part of the mini-budget.

“Against this backdrop, we expect the debate over the Bank’s independence to intensify in the weeks ahead.”

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