The Bank of England has just announced a base rate rise from 0.1% to 0.25%. It’s the first rise in the base rate for three years. So what does the rise mean for house prices? Will house prices crash or will they continue to rise in the new year?
Here I take a look at what the interest rate rise means for house prices and mortgages, and what the wider impact on our finances might be.
Why has the Bank of England raised interest rates?
Interest rates and inflation are closely tied together. Banks, businesses and individuals all rely on borrowing to help them spend money. And lower interest rates tend to encourage higher inflation.
The cost of living rose by 5.1% in the year to November, and inflation is well above the government’s target of 2%. The Bank of England has come under pressure to raise interest rates … Read more