Oct 28, 2021
Will mortgages become more expensive? and other Budget questions
Mortgage rates have been very low by historical standards in recent times - and that is partly why there has been such high demand for homes during the pandemic. Normally, you would expect inflation to be controlled by higher interest rates - which often lead to higher mortgage rates. Ultimately, it is up to the Bank of England - not the chancellor - to decide whether interest rates need to go up. The government's independent forecaster, the Office for Budget Responsibility, says if inflation rises by more than 5%, which is possible, then a higher Bank rate and more expensive mortgages are much more likely. With prices predicted to rise at a rate of 4% a year, that becomes a real-terms cut in income.
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