 base rate will reach 4% by the end of the year. The BoE base rate is used by high street banks to set their own interest rates for customers on things like credit cards, loans and mortgages. The base rate has increased seven times in a row since December last year, when it was at a historic low of 0.1%. The base rate is currently 2.25% and is expected to rise again next week. The Bank of England meets every six weeks to decide if the rate should change or not. It has been increasing rates as a way to tackle soaring inflation, which has hit a fresh 40-year high of 10.1%. Mortgage rates have shot up in recent months as a result of the rate hikes. And recent turmoil in the markets as a result of former PM Liz Truss' mini-Budget has pushed them up further. Mortgage rates hit a 14- year high, but the appointment of a new PM and major u-turns on unfunded tax cuts has seen them start to fall back. Earlier this month the average two and five-year fixed mortgage rates sat at their highest levels since 2008. According to MoneyFacts the average two-year mortgage rate peaked at 6.65% on October 20 - up from 2.25% in the previous year. The average five-year deal peaked at 6.51% - up from 2.55% in the p){kind=link}
HOUSE prices could fall next year by 8% a major bank has warned.
Property prices have come under pressure after mortgage rates shot up following the disastrous mini-Budget, and amid rising inflation.
Higher rates make it harder to borrow money to buy a house and that can mean property prices go down as demand drops.
Lloyds Banking Group has said it expects house prices to fall by around 8% in 2023.
The banking group owns Lloyds, Halifax and Bank of Scotland and is the UK’s biggest mortgage lender.