What the 4% interest rate means for Sunderland home buyers and owners
Written by Godstime David on 20th February 2023
Sunderland homeowners and first-time buyers have been reacting to the Bank of England’s 4% interest rate hike.
The first-time buyers and homeowners Spark spoke to felt the move was unfavourable for them. The Bank of England raised its base rate of interest from 3.5% to 4% – the highest rate in 14 years – in an effort to combat inflation.
Martins Morton, 31, said buying a house used to be a huge and wise investment “but I am not sure anymore”.
The health practitioner said: “I have been saving to buy my first home and just when I found a deal, the increase rates were announced. To be honest, I am no longer as enthusiastic and excited as I used to be about owning a home. For now, I have settled with renting as an option.”
Stephen Harris, 62, told Spark that the interest rate increase is not only going to affect first-time buyers, but possibly homeowners: “This is not good news for anyone. Presently, I live in a rented house and my rent is expected to rise by 5% in April.”
He added: “The worst part is, this is never getting better. My friend’s son who already has a mortgage will have to pay £100 extra, that’s insane! I would say If the purpose of the interest rate rise is to reduce inflation, then the Bank of England has lost it.”
Product manager Paul Coulthard said: “Every situation is subjective, however, the first-time buyers are worse off I’d imagine. The current government is to blame, awful custodians.”
The 54-year-old also said: “Between 2014-2018, I had a fixed contract. The interest rate fell and I relatively lost out. It’s now turned the other way.
“I am on a fixed deal so I don’t need to worry for three years. However, I know a guy who unfortunately had to remortgage and pay an extra £10,000 to keep his repayments.”
June Grayston, 25, said: “Saving right now to buy a house will probably reduce my life span. That means I have to work more than two jobs or take extra shifts to save up.
“Currently, I’ve got two jobs and it’s not even enough. The only way to think of this increased rate would be to conclude that the government is doing everything to stop young people from owning their own homes,” the customer care representative added.
The 4% rise means people with a typical tracker mortgage will pay about £49 more a month – while those on a variable mortgage will pay another £31 a month. The Bank says the UK is still set to enter recession this year, but this will be shorter than previously thought.