Bank of England raises UK interest rate to 4%
Bank of England raises UK interest rate to 4%
Not long ago it became known that the Bank of England raised the interest rate again: it rose to 4%. The need for such a decision is due to the fact that private sector wages have become much higher than the central bank’s experts had expected.
According to the updated economic forecasts, inflation has reached its peak. Although the expected recession will not be as severe, the damage to the economy will be much earlier than experts have stated.
The need for a rate increase
The Bank had previously issued statements that output would be lowered by 1% at once. The UK GDP growth forecast has been raised, indicating that a recession can be avoided if the economy shrinks. The economy is expected to contract throughout 2023 and early 2024. There are great risks that an increase in wages and another rise in gas prices could lead to higher inflation.
The bank expects the figure to fall from 10.5% to 3.5% by the end of the year; the forecast for 2024 is 1%.
The Impact of a Rate Increase on Property Values
Due to the unexpected rise in interest rates, those paying mortgages faced an increase in payments of £3,000 a year at once. In addition, household rent bills have risen significantly due to the high cost of borrowing and lending.
Interest rates are not yet expected to peak at 5.25%. Many people attribute the rise in interest rates to the fact that private sector wages have risen in the months before the decision: this has affected employees in the financial and business sector as well as lawyers and accountants. In most cases the increase was up to 4%, the maximum rate of increase being 7.2%.
Our estate agency is closely monitoring the situation not only in the banking sector, but also in the residential, investment and commercial property markets. Cooperation with us gives you:
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