Debt Balancing Act By Bank of England

The Bank of England faces a deft balancing act as it tries to combat inflation while not sending the UK into a deep recession.

This interest rate hike is the highest we’ve seen in over three decades and millions of homeowners on tracker mortgages or standard variable rate mortgages will see their monthly repayments shoot up immediately.

The rising tide of borrowing costs will likely see house price gains normalise back to more historical averages in the months ahead. But the cooling effect is unlikely to be as dramatic as some doomsayers are forecasting.

Existing homeowners have been stress-tested to make sure they are able to withstand the pain of spiking interest rates. It won’t be pleasant, but most will adjust to the new normal by making savings elsewhere.

If you’re unsure what kind of mortgage you are currently paying, it’s worth double-checking with your lender, as our research shows that 1.5 million fixed-rate mortgages are coming to an end in 2022.