19 Sep Interest Rates To Rise Again This Week by 0.75% Piling More Mortgage Misery On Homeowners…
Interest Rates To Rise Again This Week by 0.75% Piling More Mortgage Misery On Homeowners
Following the Queen’s funeral, it is time to get back to the reality of the crisis we are facing in the UK.
UK interest rates set to rise again this week by the biggest margin in 33 years, as pound slides against the US dollar. Sterling has fallen to a 37 year low against the US dollar, the reserve currency of the world.
This means that the UK is paying 15-20% more for imports, such as oil, on top of all the other factors causing prices to rise at the fastest rate since the early 80s.
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More misery than expected for mortgage holders when the Bank of England monetary policy committee meets this week (following a delay for the Queen’s period of mourning) to set UK base interest rates. The new Chancellor Kwasi Kwarteng will announce his first mini-budget on Friday.
Rates could rise by at least 0.5%-0.75% or even 1% this week. A 0.75% hike would mean that the average mortgage holder, with a loan of £138,000, will be paying an additional £728per annum (based on a variable rate loan).
Whilst most mortgage holders have a fixed rate mortgage, when these deals come to an end, borrowers will suffer a steep rise in monthly payments.
The days of low interest rates and cheap borrowing have come to an end for the time being.
The Federal reserve has been aggressively raising interest rates to come back inflation which has strengthened the dollar and weakened sterling and the euro.
Higher interest rates means that buy-to-let investors taking out a mortgage will need to carefully examine the viability of rental properties based on increased loan repayments. Average yields will be hit by higher mortgage costs which have doubled in many cases.
Mortgage lenders are already factoring in higher interest rates when calculating affordability and borrowing levels. Higher rates usually results in lower mortgage loans for borrowers.
Businesses borrowers also face huge additional costs on top of the cost of running the businesses with higher oil and power prices. Insolvencies in England and Wales are up as thousands of businesses go to the wall.
Higher interest rates and tighter monetary policies, designed to control inflation, will cause the worldwide economy to slow down.
Unfortunately, low paid workers and small businesses get hit hardest as if you can survive very long during a recession.
In the last 10 years, consumers have taken on enormous amounts of cheap and plentiful debt on their homes, as well as to purchase luxury items such as cars, boats and recreational vehicles.
This is all very well as long as they have income to service the debt when income slowdown people get into trouble and business for debt collectors and bailiffs starts the boom.
Expect to see more repossessions of homes and cars next year.
In my S.M.A.R.T money course, I always stress that borrowing to buy consumer goods – which go down in value – is a bad idea.
Now is the time to prepare for the economic winter ahead.
Get your house in order and fasten your seatbelts for a rough ride ahead.
When times are good, and borrowing is cheap everyone buys more on credit and the economy expends. But the cycle never lasts, as we cannot keep on borrowing and creating money out of thin air forever…It hasn’t worked in the past and it will not work now.
The party is over!
Inflation is running out of control, which means the central banks will have to tighten monetary policy and pull back the reins on the economy – slow down the economy causing a recession.
Now is the time to learn how to manage your money and prepare for the financial winter.
- Do you have any savings?
- Do you know how to invest or where to invest your money to build financial freedom?
- For how long could you pay your bills if you lost your job?
- Are you fed up struggling?
What can you do transform your finances and become financially free?
To help you get through this and come out stronger at the other end I have prepared a brand-new training, which you can access right now from the comfort of your home.
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