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U.K. banks raising mortgage interest rates…cause inflation hasn’t fallen as much as expected. Can anyone do an ELI5 as to why? (lemm.ee)

submitted 6 months ago by [email protected] to c/[email protected]

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As the title says, numerous banks in the U.K., maybe across the world, are raising interest rates on mortgages, and the given reason is cause inflation hasn’t fallen as much as expected. Can anyone give me a basic inflation, other than greed, as to why they’d do this?

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[–] [email protected] 2 points 6 months ago

Primarily because if you continue issuing mortgages at the same rate, then people who get those mortgages will be paying you money that is worth less and less over time. Your mortgage payment might be a thousand pounds per month now and would stay that way for 30 years but in even five years 1,000 pounds will only buy the mortgage company what say 950 pounds would buy today