Interest rate rise could see Highland mortgage payments rise by £300 per month
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The Bank of England has raised interest rates from 4.5 to 5 per cent as it attempts to tackle high inflation, adding to the strain on households struggling with soaring mortgage costs.
This is the 13th consecutive rise in interest rates, taking it to its highest since 2008.
'£200 to £300 being added to people's payments'
The rise will see higher repayments for people with loans and many mortgage holders, with some people already having seen their payments rise by over £500.
Phil Anderson, owner of Phil Anderson Financial Services has said that today's news is 'concerning' for those who are on variable rate mortgages and those coming to the end of a fixed rate period.
He said: "A 0.5 per cent increase means someone with a £100,000 variable rate mortgage will see their payments rise by over £40 per month.
"We are seeing a lot of clients coming off low fixed rates and in some cases, this can be adding £200 to £300 per month to peoples payments."
He has warned that the rise may slow the property market in the region.
He added: "We have already seen prices in the region stabilise and we are getting quite a number of enquiries from clients who are concerned about their disposable income being squeezed."
Business
Businesses are also seeing the impact of the rises once again, as most are already paying increased overheads in every sector.
Responding to today’s announcement that the Bank of England has raised interest rates by a higher than expected 5 per cent, the Federation of Small Businesses’ (FSB) Scotland Policy Chair Andrew McRae said: “There has been a grim inevitability about the successive interest rate hike announcements we’ve had to sit and watch over the last year.
“We of course need to get inflation down, but this decision will have far-reaching consequences.
“As small businesses look to trade the country back to economic recovery, this will come as a cruel blow to their plans. We know that smaller firms already find it harder to access finance, so making debt more expensive will surely put a further dent in their chances, affecting their margins and rippling through their business.
“Obviously, it’s mission critical that inflation is brought down. And, while interest rates are a traditional lever to do so, this is not a traditional consumption and consumer-debt fuelled inflation spike. That’s why we need a more rounded response – from the UK Government raising the VAT threshold from £85,000 to £100,000, to the Scottish Government delivering on their regulation pledge, to energy suppliers allowing firms to ‘blend and extend’ their contracts so they can take advantage of lower wholesale prices.”
