• Mortgage Rates Surge as Bank of England Raises Interest Rates
• Sainsbury’s Claims Food Prices Are Slowing
In the wake of the Bank of England’s decision to raise interest rates to a 15-year high of 5% last month, the cost of securing a typical five-year fixed mortgage deal has surpassed 6%. This increase in mortgage rates has been accompanied by lenders withdrawing deals, driving up costs for homeowners across the country.
The average rate for a five-year fixed mortgage now stands at 6.01%, according to financial information service Moneyfacts. Similarly, the average two-year fixed deal has climbed to 6.47%. The last time both rates exceeded 6% was in November of last year when interest rates surged after the mini-budget announced by former Chancellor Kwasi Kwarteng.
Prime Minister Rishi Sunak has called on homeowners to “hold their nerve” amidst rising rates, acknowledging the challenges faced by homeowners due to increasing mortgage costs. As mortgage lenders respond to the Bank of England’s rate hike, homeowners are advised to review their financial situations and explore options to mitigate the impact of rising rates.
The current surge in mortgage rates is a result of the Bank of England’s efforts to curb inflation, which has been on the rise. While higher interest rates are intended to combat inflation, they pose challenges for individuals looking to secure affordable mortgage deals. Homeowners and prospective buyers are urged to monitor the market closely and seek advice from financial experts to make informed decisions.
In other news, Sainsbury’s Chief Executive Simon Roberts has stated that food prices are not rising as rapidly as before, leading to increased consumer spending. Sainsbury’s reported nearly a 10% rise in the value of goods sold between April and June, attributing this growth partly to favorable weather conditions and the impact of holidays.
Roberts emphasised Sainsbury’s commitment to passing on savings to customers, acknowledging the rising food prices in recent months. Despite overall food price increases, the supermarket chain has taken steps to lower prices on essential items like bread, butter, milk, and toilet roll. Roberts further noted that the prices of the top one hundred grocery items were lower than they were in March, signaling a slowdown in food inflation.
As food inflation eases, customers can expect prices to continue rising, albeit at a slower pace. Supermarkets, including Sainsbury’s, are actively working to battle inflation and provide customers with cost-effective options. The focus remains on maintaining competitive prices while ensuring quality and value for shoppers amidst a changing economic landscape.
