The biggest single base rate rise since 1989 might be welcome news for savers but will bring more worry for those with loans and mortgages.
We remain of the opinion that the Bank are doing more harm than good which Andrew Bailey himself acknowledged, saying that if rates were to be raised as high as the markets predict then we would be looking at a very long and difficult recession. He said that, whilst we need to see what happens, his view is that rates are unlikely to hit 5%. So it would appear that he has actually been reading our commentary over the past few months!
There must be thousands of households that are extremely worried about what will happen to their mortgages – particularly those that are coming to the end of a fixed rate term as they will be facing a significant increase in monthly payments on top of all the other increased bills.
Obviously businesses are still going to be struggling with this latest rise in interest rates and we would like to reiterate our view that any business worried about its finances should take decisive action and seek independent professional advice before it is too late. We are seeing pubs and restaurants closing on a daily basis – including well known high end businesses – and a drop in retail sales.
Given that the majority of cars are bought on finance this latest rate rise may well have a knock on effect on car dealerships, if people are unable (or unwilling) to pay increased finance costs. However, this might mean that the servicing and repair businesses will benefit if people keep their cars for longer.
If you are involved with, or know of any business or individuals that are struggling financially we suggest that you talk to us.
The directors of SKSi look at a formal insolvency process as the last resort – not the first. It is their long held belief – borne out with proven experience – that seeking advice at the first sign of financial pressures will lead to a more favourable outcome. Conversely, doing nothing and hoping the problem will go away is far more likely to lead to a critical outcome and insolvency.
We are always available for an initial zero cost assessment which can be arranged by contacting Alistair Dickson.