Interest Rates. Why are they going up & when will they go down?

Why have they gone up? 

Since the war in Ukraine food & energy prices have risen causing consumer price index inflation to go up above 10%

Increase in interest rates makes it much more expensive to borrow and will encourage more people to save.

Consumers will be more careful about spending money. The demand for goods & services will reduce and this will trigger reduction in prices.

When interest rates are low inflation goes up and when they are high inflation falls.

Crisis? The International Monetary Fund says that third of the world’s economy is now in recession.

So, when will we see interest rates go down?

The Base Rate is expected to hit 5.25% by end of 2023 which is lower than predictions made by investors few weeks ago.

Investors are starting to feel reassured that the rates won’t rise as high to help offset tax cuts as suggested by chancellor Kwasi Kwarteng as this has been reversed.

It is likely that BOE base rate will continue to rise through 2023 but potentially start falling in 2024 as it expects inflation to go up much slower and potentially start falling again.

Inflation is expected to hit 11% towards end of this year but will gradually drop 2% in two years’ time and again in three years. We will then see that price increase will ease and interest rates will start to go down.

From April next year when the gas & electricity price freeze stops it is likely to be the reason for interest rates reducing quicker however, many of us will have less money as the energy prices will go up.

Want to chat about your Individual Mortgage Requirements? 

Call me  01483592743 or 07834173731  or send me an email at  info@themortgagechoice.co.uk

Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage. Think carefully before securing other debts against your home.

Information sourced & for full article please visit MSN.com  HERE

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