Tim Darwall-Smith, Director, SBA Property Management  

Earlier this month, the Bank of England raised its Bank Rate to 1% from 0.75%. This follows the inflation rate running at 7% in March 2022 – its highest level for 30 years. 

The change follows a recent Monetary Policy Committee (MPC) meeting, in which members consider factors such as the rate of inflation, economic growth, and the UK employment rate. By increasing interest rates, the Bank of England hope to curb rising inflation by making the cost of borrowing more expensive. 

The rising rates have a significant impact on the national housing market. Many commentators believe that there will be further increases as the year goes on, with worldwide material supply issues continuing following a return to trading post-covid and the ongoing conflict in Ukraine. 

One of the main concerns with a rise in interest rates is the potential impact on the cost of mortgages. When the Bank Rate rises, mortgage rates soon follow, increasing the cost of borrowing. 

Around a third of adults in the UK have a mortgage. 74% of mortgage holders are on fixed-rate deals, so will only see a change in their repayments when their current term ends. Around 1.5 million fixed-rate deals will expire in 2022. Of the remaining homeowners, around 850,000 are on tracker deals and about 1.1 million are on standard variable rates, so will see an immediate change to their monthly payments now that the Bank rate has risen. 

The increase to a typical tracker or SVR mortgage customer will have knock-on consequences on household budgets. As people’s disposable incomes are squeezed, the cost-of-living will increase and tenants will struggle to afford rents, slowing the growth of the rental market. 

We understand that rising costs are a worry for everyone right now – with everything from interest rates to the price of fuel skyrocketing. According to the Office for National Statistics, 87% of adults in the UK reported an increase in their cost of living in April 2022. 

At SBA Property Management, we have always placed affordability at the centre of what we do as a specialist residential block management and facilities management services provider. We continue to keep service charges at a reasonable level by monitoring costs and understanding the impact of fluctuating interest rates. 

To ensure our services are as efficient as possible, we constantly review our methods of working. This saves our clients time, money, and the stress of marketing their rentals, collecting rent, handling maintenance issues, and responding to tenant complaints. Whilst the cost of living continues to fluctuate, we aim to remain a steady hand in times of need.