- Interest rates might be low by historical standards…
- But high loan-to-income ratios will see affordability squeezed
If forecasters are right, the Bank of England (BoE) will have increased interest rates to 4.75 per cent later this week. Just weeks ago, it looked as though the end of rate hikes were in sight, but sticky inflation means that markets now expect the base rate to rise above 5.5 per cent.
Unsurprisingly, the breakneck speed of developments has caused volatility in the mortgage market. David Goebel, associate director of investment strategy at wealth manager Evelyn Partners, is among those who note that last week saw “lenders withdrawing products en masse and falling over each other to reprice”. Mortgage rates are now approaching the levels seen in the aftermath of the Truss-Kwarteng mini-Budget last autumn.