“We have a very tough year ahead and raising rates now is not the answer,” he concluded.
According to online mortgage broker Trussle, the latest base rate increase could add a further £316.56 onto the average mortgage annually.
This is on top of the previous increases in January and December which it said added £650.04 to homeowners’ annual repayments. As a result, Trussle said homeowners’ may see their mortgage increase by £972.60 each year.
Scott Taylor-Barr, a Shropshire-based broker at Carl Summers Financial Services, said the issue is that the biggest price increases are on essentials, not things consumers choose to buy.
“So is adding to what is widely touted as the biggest decrease in our standard of living for decades by increasing interest rates really that helpful?”
Inflation is not rising because “we're all feeling flush and spending our money on luxuries”, said Taylor-Barr. It's rising, he went on, because the essentials of modern life are all “skyrocketing”.
“Increasing people's mortgage payments isn't going to bring down the price of petrol.”
‘We need to wean off ultra-low interest rates’
Some brokers, however, were not so quick to criticise the Bank of England’s decision to keep raising the base rate.
Graham Cox, founder of the Bristol-based Self-Employed Mortgage Hub, said: “As much as it adds to the existing pain, I do think we need to wean the economy off its dependence on ultra-low interest rates.”
Last year, Nationwide became the first lender in British history to offer a sub-1 per cent rate on a five-year fixed rate mortgage. A few months later, the lender also launched the UK’s first ever sub-1 per cent buy-to-let mortgage, meaning landlords as well as retail borrowers could benefit from some of the lowest interest rates ever recorded.
But now, with three successive base rate rises in four months, these historically low rates are back on the rise.
“Inflation is running riot and could remain high for a couple of years. It will cause huge damage to the economy if we're not careful,” said Cox.
“I think we need to continue slowly raising the base rate and take the medicine now. Or we will be storing up far greater problems for later on."
Simon Gammon, managing partner at Knight Frank Finance, said often the repricing his team is seeing is by as little as 0.1 or 0.2 per cent.
“But if that’s happening every other week then you start to see a steady upward trend,” he explained.
"Five-year fixed rates were as low as 0.91 per cent late last year, but now you’d be lucky to get them under 2 per cent. Borrowers haven’t missed the boat, these rates are still very low by historic standards. But we do expect the upward trajectory of mortgage rates to endure for the foreseeable future."