The Bank of England has announced its latest change in base rate, which is used by most lenders to determine interest rates on mortgages and other borrowing.
The increase is a larger-than-expected 0.5 per cent taking base rate to 5.0 per cent.
Most commentators had predicted a 0.25 per cent rise.
Today’s is the 13th successive rise by the Bank’s monetary policy committee, and follows yesterday surprise news that the Consumer Prices Index inflation rate was unchanged in May at 8.7 per cent.
Many analysts say it’s now almost certain that the committee will raise rates further over the rest of 2023 at least.
It comes as concerns have mounted over the mortgage market, with the average two-year fixed residential mortgage rate surpassing 6.0 per cent according to Moneyfactscompare, an independent mortgage monitor.
Chancellor Jeremy Hunt is meeting bank and building society chief executives tomorrow to consider what additional help they can give to struggling borrowers.
However he has already ruled out reinstating any tax break that would cut monthly payments, saying: “Those kind of schemes, which involve injecting large amounts of cash into the economy, would be inflationary."
Meanwhile Labour says borrowers should be allowed to switch to interest-only payments for a temporary period to ease the crisis. Although some lenders are suggesting this to struggling customers, Labour wants it enforced.
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I understand the economic principle but can’t help but feel the current interest rate rises are ultimately stoking inflation rather than reducing it.
After Brexit, Covid and the energy crisis, the fact that the government are now intentionally imposing further hardship on the public is unfortunate, to say the least.
It's not working, wake up Bank of England. Asking 5% of homeowners whom are currently on trackers or variable rates will not work. All you had to do was do nothing, surely after all these years you've perfected that!
‘ Shock’ ⚡️ Really ?? This and the others to come will mean a reduction in house prices.
Today has made you a step closer to being right, though I hope you're not!
What amazes me is that the BOE increases interest rates as many times a year as they want to, then it's fine by the government.
If a landlord increases the rent by the slightest amount once in many years, then we are the scum of the earth and driving tenants into poverty??
The UK is in such a deep hole at the moment, I don't think it will ever be able to dig itself out.
If we get rid of 50% of the MP's the UK could save a fortune. All they seem to do is argue among themselves and get paid a fortune to do it. Should they be bothered to show up in parliament.
Makes me angry to be a UK tax payer.
That is the exact reason I buggered off nearly eight years ago. Don’t mind paying tax if I can see value, I could not see any value in what I was paying so removed myself from the drama of it.
Disgraceful decision. Aimed squarely at putting homeowners on the streets. Many have not yet been impacted by the financial sledgehammer that is hanging over their heads and being added to every month. Ramping up interest rates so homeowners will suddenly see their mortgages double when their income hasn't even risen really is the lowest of the low.
Don't you mean Homebuyers? The Home owners have nothing to worry about.
What is disgraceful, was leaving interest rates almost non-existant for far too long, Rates should have been raised as soon as inflation looked like going over 2% but this was ignored by an incompetant Bank of England Governor
Also where is the promised growth going to come from. Certainly no joined up thinking here.
Mortgages double, I think it'll be more than that 1.95% to possibly 8% is more like quadruple. Strange inflationary measures like increasing the minimum wage by over 10%. Time to sell up ohhh dear too late price crash.
I now have properties that I have had for 18 years just about break even, but I will actually have to pay Section 24 tax on the interest cost. Here is where Section 24 starts to bite. They bring in the tax when interest rates are 0.5% now they are 5%. So £100,000 mortgage at say 8%, that's £1,600 tax to pay on a break-even position.
Successive governments do not have a clue about housing. Who would be a landlord now and where will the rental stock come from?
Isn't about time Sunak, Hunt and Bailey did the decent thing and resigned?
They are clearly out of their depth and the country needs some responsible adults to try and deal with the fiasco this trio have orchestrated.
Please apply for the PM job Jo.
Jo Wesrlake, I agree, simeone from landlord zone. Thet privide housung, show responsibility towards the tenants with meeting numerous requirements, which gov't so called officers could never get their head around. To them it is pass the buck to landlord by sitting in a tower and seeing eveeything with rose tinted glasses
The Bank of England have ballsed it up again. I was worried they would do this, but to do this and say more to come is careless and incompetent.
Quantitive easing and poorly managed interest rates over the last 10 years have really got us in a mess now and for hard working mortgaged homeowners to be carrying the load is not on.
Osbourne, put him up against the wall and shoot him down, metaphorically of course. His policy of section 24 will now come home to roost and ruin many a Landlord. It needs to be gone now and Landlords remunerated for the extra tax incurred. This policy on it's own has strangled investment in rental properties, deterred future Landlords and existing ones expanding. Choice and abundance of properties to rent would have kept rents down. Competition is it's own leveller. If they had wanted to calm BTL they should have brought section 24 on new lending only. At least then you could have planned and factored in your risk!
I am not convinced that there can be a price crash, however, it has become more likely than less likely after today's decision.
What chance now have we of getting properties ready for EPC's, I could laugh out loud, oh, except it's not funny!
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