The Bank of England raised its key Bank Rate by 25bps to 0.75% during its March 2022 meeting, in line with expectations. It is the third consecutive rise in borrowing costs, taking interest rates back to pre-Covid levels. Developments since the February Report, in particular the invasion of Ukraine by Russia, are likely to accentuate both the peak in inflation and the adverse impact on activity by intensifying the squeeze on household incomes. Inflation is expected to increase further in coming months, to around 8% in 2022 Q2, and perhaps even higher later this year. Based on its current assessment of the economic situation, the Committee judges that some further modest tightening in monetary policy may be appropriate in the coming months, but there are risks on both sides of that judgement depending on how medium-term prospects for inflation evolve.
Source Bank of England
Interest Rates in the United Kingdom were widely expected to reach 0.75% by the end of quarter one of 2022 which has played out. According to Trading Economics global macro models and analysts expectations, in the long-term, the UK Bank of England base rate is projected to trend around 1.75% in 2023 and 2.00% according to their models.
As a result, the trend for UK mortgage rates is likely to drift further upwards and so getting advice on a suitable mortgage deal in the fortcoming years will remain as important as ever.