Mortgage rates will be increased by Nottingham’s largest homegrown financial institution following the Bank of England’s decision to raise interest ra
Mortgage rates will be increased by Nottingham’s largest homegrown financial institution following the Bank of England’s decision to raise interest rates for the first time in 10 years.
Nottingham Building Society said customers borrowing money using its base rate tracker products – which reflect the base rate set centrally – will be faced with more expensive fees from the start of next month.
It follows today’s (Thursday, November 2) announcement by the Monetary Policy Committee (MPC) that interest rates will be lifted from a historic low of 0.25 percent to 0.5 percent.
The move also reverses a cut made in August last year, which was revealed by Governor Mark Carney during a visit to Nottingham.
A spokeswoman for the society, which trades as The Nottingham, said: “As a society we have almost eight times as many savers as we do borrowers, so we will now review our rates for all customers with a variable rate product.
“This will ensure we take a measured approach, being fair to both our savers and our borrowers.
“We always seek to balance our approach. Last November we reduced our standard variable rate for mortgages, benefiting thousands of borrowers, whilst at the same time we offered competitive savings products that led to record levels of retail savings balances in our branches.”
Almost four million UK households face higher mortgage interest payments after the rise, but it should give savers a modest life in their returns.
The main losers will be households with a variable rate mortgage, while holidaymakers will also be indirectly affected as the pound plummeted following the news.
East Midlands Chamber said it would have preferred a further period of monetary stability, with interest rates retained at their historic low for the near term.
Director of policy Chris Hobson said: “However, today’s quarter of a percentage point rise may have little effect on most companies, although some will view this as the first step in a longer policy movement, which could defer investment.
“These are challenging times for monetary policymakers.
“The MPC had the unenviable task of weighing future risks to inflation, from a tight – and tightening – labour market, pass-through from a weaker pound and rising commodity prices.
“Against this, they needed to consider the future risks to undershooting the inflation target from weak growth, fragile business confidence, and the effects of uncertainty.
“These are finely-balanced judgements. While interest rates will need to return to historic averages at some point, it should be done slowly and with reference to the ever-changing economic context.
“With the Bank of England’s latest forecasts of sluggish growth for the next few years, the Government must use the upcoming Budget to boost business confidence for investment and reduce burdens such as business rates hikes.”
Richard Blackmore, East Midlands regional director of business lobby group, the CBI, said: “Businesses will be watching the reaction of consumers closely and what’s important is the pace of any future rises.
“As rates creep up, it’ll be important to keep an eye on the impact for those at the lower end of the income scale.”
Simon Browning, partner in charge of the Nottingham office of global accountancy group UHY Hacker Young, added: “I don’t believe this will have an instant major impact, as it puts us back to the same position we were in before the Brexit vote only 15 months ago.
“However, it could be the start of something – what lies ahead is more interesting and we could see some further rises.
“I think that’s when we will start to see individuals and businesses under more financial pressure amid further rate rises in an attempt to calm inflation.”