The Bank of England raised interest rates from 5% to 5.25% on August 3. This is the 14th consecutive increase since December 2021, when the bank rate was only 0.1%, which was also the highest level since 2008.# {1}
Important date: The next interest rate decision will be announced on September 21. However, the latest data from the Office for National Statistics (ONS) showed that the inflation rate fell to 7.9% in June from 8.7% in May, which may mean the end of the Bank of England's interest rate increase cycle.
1. Bank interest rate adjustment
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The Bank of England raised its interest rate from 5% to 5.25% on Thursday, August 3.
Since December 2021, this is the 14th consecutive rise.At the time, bank interest rates were just 0.1% and are now at their highest level since 2008.
The next bank interest rate decision will be made on September 21.However, with the latest data from the Office for National Statistics (ONS) showing that inflation fell to 7.9% in June from 8.7% in May, this rate increase is likely to be the last of the Bank of England's current cycle. .
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The relationship between inflation rate and interest rate: Inflation rate (Inflation Rate): a sustained, widespread and significant increase in price levels. When the inflation rate exceeds the target, the central bank often raises interest rates to suppress excessive price increases.
2. The response of the housing loan market
Since September last year After the mini-budget, mortgage rates soared for the first time, market uncertainty increased, and the pound fell to historical lows.
Major banks such as NatWest, Barclays, Halifax and Virgin Money temporarily withdrew some offers and then relisted them at higher prices.
3. Current mortgage interest rates
According to the broker, currently The best two-year fixed rate was 4.89%, down from 5.53% last week.The average two-year fixed rate is now 6.25%.The average two-year tracker rate is now 5.53%, with a best of 5.14%.
Explanation of professional terms for mortgage interest rates:
Fixed interest rate loan ( Fixed Rate Mortgage: A type of mortgage in which the interest rate remains unchanged for a specified period.
Tracker Rate Mortgage: A type of home loan in which the loan interest rate floats based on a specific benchmark (such as a bank's benchmark interest rate) .
Faced with the reality of continuous rising interest rates and falling housing prices, Chinese buyers must make wise decisions.
First, rising interest rates mean higher loan costs, but we are also seeing signs of falling house prices, which provides buyers with a rare opportunity Chance. However, don't be tempted to make an impulse purchase just because of a small drop in home prices. Considering interest rates have likely peaked and are about to stabilize, there's no need to rush.
Therefore, it is wise to leave room in your budget for possible future expenses.
Third , given the rapid rise in interest rates and the current economic situation, domestic buyers may pay more attention to leasing when considering property in the UK Earnings, not just capital appreciation from the home purchase.
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Therefore, assessing the potential rental market and rental demand in the area will become critical.
Fourth, for those Chinese buyers who already own properties in the UK, it may be a good idea to consider refinancing or reassessing their financial structure if interest rates subsequently drop. good idea.Not only does this ensure you're getting the best interest rate, it also gives you some financial flexibility to deal with possible financial challenges.
In conclusion, the UK real estate market is experiencing a series of challenges, from high inflation and continuous interest rate increases to falling house prices.
For Chinese buyers considering purchasing property in the UK, now is a time to be cautious and thoughtful.Utilize all available resources and ensure your decisions are based on sound market understanding and informed financial planning.
