Interest Rates Rise AGAIN: How the Fed and BoE's 0.25% Hike Will Impact Your Mortgage and a Slowing Property Market

Money Tips Daily by Charles Kelly, former IFA and author of

Last week, both the Federal Reserve in the United States and the Bank of England have announced a 0.25% interest rate hike. This move comes in response to rising inflation and a strengthening economy. While interest rate hikes may be good news for savers, they can also have a significant impact on the mortgage and property market.

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One of the most immediate impacts of the interest rate hike will be on fixed-rate mortgages. These mortgages are often preferred by buyers because they provide a predictable monthly payment over the life of the loan. However, when interest rates rise, the cost of borrowing increases, which means that fixed-rate mortgages will become more expensive. This may make it more difficult for some buyers to qualify for a mortgage, or force them to adjust their budget to afford a higher monthly payment.

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The interest rate hike could also impact the demand for homes. As the cost of borrowing increases, some buyers may decide to hold off on purchasing a home or look for a less expensive property. This could lead to a slowdown in the housing market, which could ultimately impact property values.

In addition, rising interest rates can also impact the rental market. As the cost of borrowing increases, landlords may have to raise their rents to cover their increased expenses. This could make it more difficult for renters to find affordable housing.

Rising interest rates could be good news for savers. As banks slowly increase their interest rates, savers may be able to earn a higher return on their savings. This could encourage more people to save, which could ultimately help to strengthen the economy.

Inflation is another factor to consider when thinking about the impact of interest rate hikes. As the cost of borrowing increases, so too does the cost of goods and services. This can lead to higher inflation, which can ultimately impact the economy. However, by raising interest rates, the Federal Reserve and the Bank of England are trying to keep inflation in check and prevent it from spiralling out of control.

In conclusion, the interest rate hikes announced by the Federal Reserve and the Bank of England this week are likely to have a significant impact on the mortgage and property market. While fixed-rate mortgages will become more expensive, savers may be able to earn a higher return on their savings. The demand for homes may also slow down, which could impact property values and the rental market. As always, it is important to monitor the situation and adjust your financial plan accordingly.

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