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Rates of interest will rise to greater than 4% next yr and remain there into 2024

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Future mortgage shock looms for fixed rate borrowers: Rates of interest will rise to greater than 4% next yr and remain there well into 2024, say City forecasts

Rates of interest will rise to greater than 4 per cent next yr and remain there well into 2024, based on City expectations. 

The revelation shall be a blow to hundreds of thousands of companies, households and mortgage holders grappling with the most important cost of living squeeze in generations. 

The Bank of England has raised rates of interest six times in a row, to 1.75 per cent, because it tries to rein in rampant inflation. 

Upward trend: The Bank of England has raised rates of interest six times in a row, to 1.75 per cent, because it tries to rein in rampant inflation

One other rate rise is on the cards for later this month, despite the growing risk of recession and the large surge in household energy bills. 

Only a month ago, experts were predicting that rates of interest would peak at 3 per cent by the tip of this yr before falling back next yr.

But with inflation set to soar well into double-digits, rates are actually expected to hit 4 per cent next February, based on SONIA, a key business benchmark used to set mortgage rates. 

Worse still, borrowing costs will proceed to rise, reaching a peak of 4.4 per cent in June 2023, and not fall below 4 per cent until April 2024. 

‘It’s an enormous move by any measure,’ said Jackie Bowie, of risk consultancy Chatham Financial. ‘The size and acceleration of the market’s rate of interest expectations is important.’ 

Higher base rates should help the pound, which has just seen its worst monthly fall against the dollar because the Brexit referendum. There are growing fears that sterling, currently at $1.15, could slide to parity with the dollar. 

The Bank of England has been criticised for not raising rates sooner to nip inflation within the bud. 

Nevertheless, the Bank’s stance is in stark contrast to its counterpart within the eurozone. 

An era of free money there’ll end this week if – as widely expected – the European Central Bank raises rates above zero for the primary time in a decade.

Best mortgage rates and the way to find them

Mortgage rates have risen substantially because the Bank of England’s base rate has climbed rapidly.

When you need to buy your first home, move or remortgage, or are a buy-to-let landlord, it is vital to get good independent mortgage advice from a broker who can show you how to find the most effective deal. 

To assist our readers find the most effective mortgage, That is Money has partnered with independent fee-free broker L&C.

Our mortgage calculator powered by L&C can allow you to filter deals to see which of them suit your private home’s value and level of deposit.

You too can compare different mortgage fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes, with monthly and total costs shown.

Use the tool on the link below to match the most effective deals, factoring in each fees and rates. You too can start an application online in your individual time and reserve it as you go along.

> Compare the most effective mortgage deals available now

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