It does feel rather like Groundhog Day as we sit here digesting the news that there has been yet another interest rate rise announced today by the Bank of England, this time the rate has been increased by 0.25%, meaning that the base rate is now at a 15 year high of 5.25%.
Hitting Households In The Pocket To Curb Inflation
The Bank are still concerned about the rate of inflation which is being quite stubborn and not playing ball by falling slower than was expected. And so they are hitting households in the pocket in a bid to curb their spending, which they hope will have a knock-on effect and bring down the inflation rate further.
The interest rate rises will probably not stop there, as it is forecast that the base rate could reach 6% before the Bank of England say enough is enough. This is of course very concerning news for many households here in Northern Ireland who are already struggling to keep up with their mortgage repayments and loans etc.
Additional Financial Strain For Those On Variable Mortgage Rates
Sinead Campbell, head of money, debt and quality at Advice NI, is quoted on the subject of these interest rate rises in an article in today’s Belfast Telegraph, saying:
“The Bank of England’s decision to raise interest rates will undoubtedly put additional financial strain on households and for those on variable rate mortgages the hike will immediately impact their budgets.
“We know more people will turn to credit to ease financial pressure during this time, however this will only add more stress in the longer term. Advice NI is here to ensure that no one is left feeling alone, overwhelmed or unsupported during these challenging times.
“If you are struggling with your mortgage or other financial repayments, please get in touch. Our expert advisors can the first step in helping find a solution and can offer advice on extending the term of your mortgage, making a temporary switch to interest-only payments, a temporary reduction in repayments or taking out a part interest-part repayment plan.”
Interest Rates To Head Higher In Coming Months
And Angela McGowan, director, CBI Northern Ireland, is also quoted in the same article, she said:
“With inflation having come down quicker than expected in June, the pressure was eased on the MPC to deliver another bumper rate rise. But, with inflation close to 8% – quadruple the Bank’s target – and wage growth around 7%, interest rates are likely to head higher in coming months.
“Economic conditions remain challenging for households and businesses alike. For firms, the cost of inputs is a third higher than pre-pandemic, the labour market remains very tight driving up wage and recruitment costs, and demand is sluggish.
“Meanwhile real incomes are still falling for households and higher interest rates are squeezing spending power further. To drive up growth and living standards in the UK without generating inflation, we need investment to increase the productive capacity of the economy. Improvements in the tax and regulatory system – as recommended in our recently published tax roadmap and green growth reports – can provide a platform for transforming the UK economy.”