Mortgage News

The Bank of England (BoE) has voted to increase the base rate by 50 basis points today, the highest increase in 27 years. It now means the base rate stands at 1.75%.

The decision comes amid a backdrop of low economic growth but high inflation which is expected to hit 11% in October.

Currently inflation is recorded at 9.4%, meaning a typical basket of goods and services was 9.4% cheaper than one year prior.

The Monetary Policy Committee voted by a majority of eight to one majority to raise the rate to 1.75%. The minority vote preferred to increase the base rate by 25 basis points.   

The last time the base rate exceeded this figure was in December 2008, when it sat at 2.00%. It was promptly lowered by 50 basis points the following month in January 2009.

Last updated: 4th August 2022

The Moneyfacts Pick of the Week showcases the best of the latest products or rate changes to hit the consumer finance market, ranging from mortgages to savings accounts. This week, I have analysed the following deals, along with their perks, of note:

Last updated: 3rd August 2022

Cumberland BS products remain competitive.

On Monday, the mortgage affordability test was officially scrapped by the Bank of England. The result is that it has become easier for some consumers to access a mortgage.

To help those looking for a mortgage, whether a first-time buyer or remortgage borrower, Moneyfacts has compiled a list of the lowest rates on the market. In addition, if these offers do not suit you, we have listed alternative products, with some making their way onto our best buy table.

The loan-to-income check remains in place to help protect the financial system. 

The mortgage affordability test has been scrapped by the Bank of England (BoE) today, making it easier for some potential borrowers to access a mortgage.

The mortgage affordability test was used by lenders to calculate if potential borrowers could afford a mortgage among other bills and payments. It involved calculating whether potential borrowers would still be able to pay their mortgage if interest rates climbed up to 3%, according to the BBC.

However, the BoE has kept the loan-to-income check in place, meaning scrapping the affordability test “may not be as significant as it sounds”, according to Gemma Harle, managing director at Quilter Financial Planning.

“The loan-to-income ‘flow limit’ will not be withdrawn, which has much greater impact on people’s ability to borrow,” she said when the BoE’s intention to scrap the affordability test was announced in June.

Mark Harris, Chief Executive of mortgage broker SPF Private Clients, agreed with this view.

“It is not turning into a free-for-all on the lending front. Lenders will also still use some form of testing but to their own choosing according to their risk appetite,” he said.