Understanding Bank of England Interest Rates: What Lies Ahead for Borrowers

Understanding Bank of England Interest Rates: What Lies Ahead for Borrowers

In the intricate world of finance, few factors hold as much sway over the economic landscape as central bank interest rates. For homeowners and potential buyers, these rates significantly impact the cost of mortgages and, consequently, the health of the property market. In this blog post, we'll delve into the workings of the Bank of England interest rates, their historical context, and speculate on what the future might hold for borrowers.

Bank of England Interest Rates

The Bank of England sets the base interest rate, often referred to as the Base Rate. This rate influences borrowing costs across the economy. When the Base Rate is low, borrowing is cheaper, encouraging spending and investment. Conversely, when the rate is high, borrowing becomes more expensive, curbing inflation but potentially slowing economic growth.

Historical Context

Looking back over the last decade, we see a significant trend of low-interest rates. Following the 2008 financial crisis, central banks worldwide, including the Bank of England, adopted a policy of low-interest rates to stimulate economic recovery. For many years, borrowers benefited from historically low mortgage rates, fostering a booming housing market.

The Impact of COVID-19

The COVID-19 pandemic sent shockwaves through the global economy. Central banks responded with unprecedented measures, slashing interest rates to historic lows to cushion the economic fallout. For mortgage borrowers, this meant even lower rates, making property ownership more accessible for many. In fact here in the UK we experienced the lowest rate on record when it was down at 0.1% leading to mortgage deals of sub 1% for a period of time. This certainly led to a short period of house price growth after the first national lockdown in 2020, on top of this there was a stamp duty holiday enabling certain transactions to go through without the extra burden of paying stamp duty.

Future Speculation: What Might Happen?

Since early 2022 the Bank of England have raised interest rates on each of their meetings except the last. The base rate now sits at 5.25% and the reasons for the rise over the past year or so has been blamed on inflation. Many people feel (me included) that the inflation was actually partially caused by the Bank of England in the first place by the vast amount of quantative easing they did during the pandemic years. On top of this we have a war in Europe for the first time in 80 years and this has put a strain on the supply of goods and raw materials from that part of the world therefore pushing up prices. None of the above could be prevented by increasing interest rates, nevertheless rates went up.

With inflation topping 10% in early 2023 the Bank of England continued to raise rates in the hope that this would bring down inflation. To a degree the policy appears to be working as inflation has now come down to below 7%, their target is 2%.

In previous blogs I have said to watch wage inflation and I stand by that. Wage inflation is around 7% currently and I think this may put pressure on actual inflation meaning rates might not have stopped going up. However to counter this the economy is not in great shape, although again better than expected, and this slow growth could lead to lowering of rates to stimulate the economy.

My best guess is that there will be another rate rise possibly this year then a long period of leaving it alone. Following this towards the end of 2024 I can see the Base rate falling a little to offer some stimulus to the economy.  Longer term I don’t think we will ever see the base rate down near 1% as we have done for so long through the 2010s. Expect fluctuations above a low of 3% and a high of 6%.

How Borrowers Can Prepare

Regardless of the future trajectory of interest rates, borrowers can take several steps to prepare for potential changes:

Financial Planning: Review your budget and ensure you can comfortably handle higher mortgage payments if rates rise.

Stay Informed: Keep an eye on economic indicators and central bank announcements. Being aware of the broader economic context can help you make informed decisions about your mortgage.

Consult a Mortgage Adviser: Mortgage brokers, like The Surrey Mortgage Broker, can provide personalized advice tailored to your financial situation. They can guide you on the best mortgage options, considering your long-term financial goals.

In conclusion, while the future path of Bank of England interest rates remains uncertain, borrowers can navigate these changes with preparation and professional guidance. By staying informed and making prudent financial decisions, homeowners and potential buyers can confidently face whatever challenges or opportunities lie ahead in the evolving landscape of mortgage rates.

How to reduce your electricity energy bill

Money-off energy scheme launched to avoid blackouts

Some households are to be paid if they reduce their electricity usage during peak hours on some days this winter, after the National Grid plans were given the go-ahead by the energy regulator. The Demand Flexibility Service (DFS) is a new service that will help National Grid avoid using its emergency services if electricity supplies are impacted this winter.

The network operator has announced details of the scheme, which it said could save households up to £100. Between November last year and March this year, initially there will be 12 ‘test’ days, designed to see how customers respond.

Those taking part will be given 24 hours' notice of a ‘test’ day

Only the 14 million homes with smart meters will be able to take part in England, Scotland and Wales, which, it is hoped, will reduce the possibility of blackouts at times when energy use is high. In order to take part in the scheme, you need a participating supplier and a smart meter.

National Grid is listing all the participating providers on the ESO website and this will be updated as new providers join the DFS. Customers taking part will be given 24 hours' notice of a ‘test’ day when they will be asked to reduce their peak-time electricity use if they can during a one-hour period identified by National Grid, likely to be between 16:00 and 19:00.

Save energy is by avoiding using large energy consumption

National Grid has confirmed 'these demonstration tests will have a guaranteed minimum price of £3KWh, meaning that a typical household could save approximately £100 across the maximum 12 demonstration tests.’ Exactly how much you save will all be down to your respective energy supplier, so make sure you're keeping an eye out when they wish to contact you.

Simple ways people could save energy is by avoiding using large energy consumption appliances such as washing machines and dishwashers during this time. Other ways include cooking before or after the peak hours, switching off lights and turning off TVs and computers – or even the central heating if in use.

What is a smart meter?

Smart meters replace your existing gas and electricity meters and tell you more about the energy you use in your home. They send regular meter readings automatically to your supplier. This keeps your energy use up-to-date.

Once you've had your smart meter installed, you'll be able to see how much energy you're using. The In-Home Display is a digital device that can sit on your desk or kitchen worktop and communicates with your smart meter.

It can then keep you up-to-date about the energy you’re using and encourage you to try and reduce your energy use. Smart meters are free, and there is no up-front cost to install a smart meter.

Need a mortgage to unlock your dream home?

Whether you’re buying, moving or improving your home, our mortgage experts are on hand to help you. To discuss your options, contact The Surrey Mortgage Broker – telephone 01252 759233– email richard@thesurreymortgagebroker.co.uk

Why buy new?

High specification home and hassle-free living, reducing the need for DIY or costly repairs

 Whether you’re taking your first step onto the property ladder or looking for somewhere new to call home, buying a new property is one of the biggest decisions you will ever need to make. New build homes are an ideal option for those looking for a high specification home and hassle-free living, reducing the need for DIY or costly repairs.

 So if the words ‘fixer upper’ send a chill down your spine, a low-maintenance new home could be the answer to your prayers.

 Here are some of the main reasons for opting to purchase a new build.

 Better quality: New builds tend to be of a higher quality than older properties due to the use of better materials and more advanced building techniques. This means that you can rest assured knowing your home will last for many years to come. In addition, provided you secure your new build early enough, it’s likely you’ll also be given the choice of a selection of tile, carpet and worktop finishes to choose from. Of course, this isn’t the case with every developer, and it’s something you need to ask before committing to a purchase.

 Low maintenance costs: Many new build properties are built with low maintenance costs in mind, meaning that they require less upkeep over time and may not need repairs or redecorations as often as older homes would. A new build home is a blank canvas, ready for you to move into and add your own style, with no work needed to repair damage left behind by previous occupants. Another one of the perks of buying a new build home is that the garden provides a blank space and an opportunity to design it in a way which makes it as low maintenance as your lifestyle requires. This means you can choose plants that require minimal care, or are largely self-sufficient.

 Energy efficiency: New builds must be highly energy efficient and are designed with improved insulation, double glazing and energy-saving appliances, which save on utility bill costs in the long run. Developments in areas such as insulation, low-energy lighting and solar panel systems have meant far less energy is required to keep a home running for longer. Typically, the Energy Performance Certificate (EPC) rating for a new home in the UK is A or B, whilst older homes are often rated as E or lower. By using less energy, new build owners also play a significant part in protecting the environment by reducing their carbon footprint.

 Warranty protection: Many new builds come with a warranty that covers you for any repair or replacement costs up to ten years after purchase, giving additional peace of mind. Cover usually starts from the time you exchange contracts and includes protection for your deposit as well as insurance against any major defects, such as foundations, external render, load-bearing parts of flooring and so on. It’s just one less thing you have to worry about.

 Modern amenities/features: New build properties often come with modern amenities and features such as open plan kitchens, en-suite bathrooms, integrated appliances and energy-efficient heating systems, making them much more attractive than older homes. They may also offer extra storage solutions such as built in wardrobes or large loft spaces which are great for growing families. In most cases, your brand-new home will have larger windows to allow in more natural light, and wider door openings for prams and wheelchairs. Floor areas for new builds are usually designed for open-plan living, which means you can enjoy a generous amount of space to cater for every type of family event.

Finance schemes: There are financial incentives that are only available for buyers who are purchasing a new build home. The incentives can be things such as helping put money towards a deposit, part-exchange deals (where they buy your existing home and sell it on) or shared equity schemes. Some may also offer paying your stamp duty, paying your deposit, free fixtures and fittings, white goods, interior design advice or landscaping, and offering cashback.

 Overall, buying a new build home provides numerous benefits over older properties, with quality construction, low maintenance costs, energy efficiency, warranty protection and modern amenities/features.

Want to find the right mortgage?

 Buying your new home is one of the biggest decisions you will ever make. Our experienced team can assist you with finding the right mortgage. Ready to look at your options? Contact The Surrey Mortgage Broker – telephone 01252 759233– email richard@thesurreymortgagebroker.co.uk

Let's get physical

Homes with fitness features offer a wide range of benefits to homeowners

 Now the festive celebrations are over and the New Year is underway, for many people their attention has moved from hearty dinners and parties to getting fit and healthy. The start of the New Year is a time where new personal goals are set and there is more of a focus on starting to live a healthier lifestyle.

 Although let’s face it, everyone dreads those early morning trips to the gym, so wouldn’t it be great if you were able to work out from the comfort of your own home? From gyms, spas, swimming pools and screening rooms, in the last couple of years such offerings are increasingly being aimed at the pursuit of ‘wellness’.

 Save time and money

 Homes with fitness features offer a wide range of benefits to homeowners. In addition to giving them the convenience of having their own personal gym, they can also save time and money by not having to go out to a separate facility.

 When it comes to home improvements, having a gym, tennis court or pool can be seen as luxury items. However, with the right budget and planning, these can actually save you money in the long run. For example, if you are someone who regularly goes to the gym, having your own fitness equipment in your home could mean significant savings on membership fees.

Model Kate Moss is thought to have spent £850,000 on a home gym and steam room, while singer Madonna's Manhattan townhouse gym reportedly cost £1.5million.

Flexibility and convenience

 By adding these to your home you’ll also have greater control over when and how often they’re used – meaning more flexibility and convenience for yourself and your family. Plus, if you ever decide to move home, they could add to the resale value of your property.

 Ultimately, it’s important to weigh up all factors before making a big purchase like this – including how much use you’ll realistically get out of it and what the long-term financial implications could be. If done right, splashing out on a home gym, tennis court or pool can add value to your property. The key is to be mindful, plan ahead and budget effectively – something which can help you get a lot more financially out of any home improvement plans.

 On many buyers wish lists

 Outdoor pools usually don't require planning permission. However, there are exceptions, and indoor pools always require consent, so check first with your local authority. It is important to consider placement. In the wrong place, a pool can be an eyesore, while a pool that dominates a small garden is generally a mistake. Typically, inground pool prices vary from about £25,000 up to £70,000 or more, depending on your choice.

 Home gyms are increasingly common and are making their way up on many buyers wish lists, even in the mid-range property sector. The equipment for a top-of-the-range gym can easily cost £40,000 or more, but it is possible to buy budget items starting at under £1,000.

 Planning and building control

 Tennis courts do not usually require planning permission if they are in the garden behind a private house. They do, however, if the property is listed, if the court takes up more than 50 per cent of the garden or significant engineering work is required, so check with your local authority planning and building control.

 Courts can take some time to build. The base is dug and laid before the surface can be added, which can stretch over several months. Having a court built typically costs somewhere between £20,000 and £50,000, depending on earthworks, surface and fencing types.

 Materials and equipment

 If you’re considering adding one of these features to your home, research is essential. Make sure you know what the initial outlay will be in terms of cost, as well as ongoing maintenance or repair costs that could come up down the line. It’s also important to consider any potential restrictions from local authorities or homeowners associations that may limit when or how often you can use them.

 Remember, it pays to shop around for the best deals on materials and equipment, so don’t rush into anything without weighing up all of your options. With a little bit of extra research and planning, you may find that splashing out on a home gym, tennis court or pool could end up making financial sense after all

 Need a mortgage that makes the process smooth and straightforward from start to finish?

 Our experienced team can help find a mortgage that makes the process smooth and straightforward from start to finish. To discuss your mortgage options, contact The Surrey Mortgage Broker – telephone 01252 759233– email richard@thesurreymortgagebroker.co.uk

Changing rooms

Interior design trends to expect in 2023

As we look ahead to 2023, a number of alternative interior design trends are emerging. One of the most popular trends that is expected to continue its rise this year is the use of natural materials in interior design schemes.

Wood, stone, marble, metal, rattan and bamboo are all becoming increasingly popular as they add texture and character to a space while also providing functionality and sustainability. Earthy tones such as muted shades of blues, greens, beiges and browns remain on trend too; these colours allow for a calming atmosphere in any room while still remaining stylish

 Another trend that is set to become even more popular is industrial-style decorating. This style combines elements from traditional industrial furnishing with modern materials and decor to create a unique, yet stylish look. With its focus on natural elements such as exposed brickwork, metal accents and industrial lighting, this style can be used to create a modern space with an urban edge.

Let’s take a look at what to expect from 2023

Workplace with flair

The workplace, whether at home or in an office, has been redefined. Yet only now do these spaces see highly individualised designs. The office may include elements that make work more comfortable.

From furniture design to layout to indoor turf, the workspace gets a happy makeover to increase its use and employee productivity. And if you’re working from home, this means setting up the interior to your precise needs.

Focus on wellness

In recent years, wellness has become an increasingly sizzling topic. Self-care is one of the keys to improving wellbeing. But an environment geared to facilitate healthy living can make a huge difference too. In fact, wellness design can set the tone for slowing down and practising mindfulness. In turn, we can function at our best. So, expect to see innovation foster beautifully healthy spaces in months to come.

Outdoor-inspired

As green design grows, interiors are moving away from colours that feel too artificial. Hues are becoming gentler and easier on the eye. As a result, interiors flow seamlessly from and to their outer surroundings. Interior design trends of 2023 and years to come will certainly see many more outdoor-indoor blends.

If you’re feeling adventurous, try incorporating eclectic furniture pieces or vintage-inspired finds for an edgy look. This gives you an opportunity to have fun with design while still remaining true to your overall style.

 Earthy palettes

 For some of us, we found ourselves ‘rewilded’ during the pandemic, discovering a newfound appreciation of nature. This appreciation could, in part, be what has led to the trend of relying heavily on earthy tones in design.

Think of the soothing greens of ocean, the duck-egg blue of summer skies, and the tan and wood of earth and trees. Rattan furniture, terracotta tiles, green velvet, dried grasses and natural wood with a pronounced grain – these are all set to be interior design trends that will impact the homes of many in 2023.

Plants upon plants

It’s safe to say that houseplants have been popular for a while now – since the 19th century, even. Homes filled with potted plants can be found in cities and rural areas alike, but in 2023, things are looking to only grow (quite literally!). We’re beginning to see the rise of the indoor tree – and not just small succulents or flowers. Lemon and olive trees will make statements in living rooms and conservatories.

Following on from those earthy tones, the introduction of more plants makes sense. But plant design will extend beyond the pots, with flowery wallpaper (think William Morris), huge dried flower bouquets and plant-inspired patterns hitting the scene.

Curves

Arcs and rounded shapes have been making their way into interiors for a while now. So we can expect more curvaceous interior design this year. While there’s plenty of room for clean, straight lines (like in the ever-popular Scandinavian design), curves are making a comeback. We’re talking about rounded corners on furniture and curved or flared backs on sofas and chairs.

As for the style of these pieces of furniture, we’re looking at designs that are both familiar and refreshing. Homes will be filled with a mix of 80s’ deco, Victorian elegance and mid-century statement pieces. Say hello to oblong mirrors, architectural details and mushroom lighting. Cabinets, sideboards and nightstands also have a curvier outlook for the future.

 Texture

When it comes to 2023 home decor trends, organic, handmade and local are best. What this means for aesthetics is more unique and inimitable pieces. That means more rough stone, more marble, more exposed rugged brick. It all comes back to nature, in essence!

This year’s interior design is all about the sensory experience of a home, about movement and light. We’ll be getting cosy and luxurious with sherpa, velvets, pleats, fringes and more. While we’re not quite at the point of textured wallpaper and ceilings just yet – at least not in the traditional sense – we will see movement in many of the materials being used, both in building and decorating.

Ready to make your move?

We understand that modern day lives are increasingly complex. Our common sense approach to mortgage advice means that we are able to help guide you through your options. To discuss your mortgage requirements, please contact The Surrey Mortgage Broker – telephone 01252 759233– email richard@thesurreymortgagebroker.co.uk