The Bank of England has just announced a 0.5% increase in the interest rate, reaching a 14-year high of 2.25%. But what does this mean for dentistry?
The Bank of England has increased the interest rate for the seventh time this year. The 0.5% increase means interest rates have hit 2.25% – the highest level in 14 years.
The hike in interest rate is a result of the Bank’s attempt to lower inflation, previously predicted to reach 13% in October.
With the new interest rate – and hopes that people will borrow less money and therefore spend less – inflation is now set to increase to only 11%.
This news comes after the Monetary Policy Committee’s meeting yesterday, where five of the nine members voted for the 0.5% increase.
This is what Wealthwide, a team of specialist dental financial advisers, has to say about the rising interest rate:
Rising interest rate
The Bank of England has today raised UK interest rates to 2.25%. It’s the seventh time in a row that the Bank has raised interest rates, in an attempt to tackle inflation.
The 0.5% increase from 1.75% to 2.25% takes borrowing costs to their highest levels since 2008, during the global financial crisis.
While this will benefit people with long-term savings accounts, it’s bad news for property owners with variable rate mortgages.
What it means for mortgages
Financial planner Thomas Dickson from Wealthwide said: ‘For borrowers with variable rate mortgages, you’ll be paying an extra £100 per month for every £250,000 of mortgage. Many dentists own several properties both personal and business, so this latest increase is significant.
‘In isolation, a slight mortgage increase would be manageable for most dentists. But against a backdrop of high inflation, energy price increases, practice profits being squeezed because of mounting dental equipment and supply costs, and increased cost of staff recruitment and retention, this latest interest rise is significant and creates a perfect storm.’
With a little bit of planning…
‘Now is the time for dentists to step back and look at their finances. If they’re practice owners, they should assess the profitability of their business.
‘Knowing and understanding your numbers – your assets, liabilities, income and outgoings – will be crucial to surviving this unpredictable financial climate. With a detailed and clear picture of your current situation and a plan of action, you can either start to make changes or have reassurance that you don’t need to take any significant action in the short term.’
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