Interest rates live: Mortgage holders under ‘storm clouds’ after Bank’s latest hike

Martin Lewis wearily reacted to the Bank of England’s rate hike, saying mortgage holders “everyone knows what that means”.

Those with tracker mortgages who follow the market will see their repayments increase, while fixed rate payers will see no change, he said.

Shadow Chancellor Rachel Reeves said in response to the rate hike: “This will be a matter of great concern for many. Families are already grappling with a Tory mortgage penalty and soaring food prices.

“The work will bring the solid economic governance much needed to stabilize the economy.”

Mortgage rates are at a six-month low since peaking in the weeks following September’s “mini-budget,” according to MoneyFacts.com, although lenders will consider their next move after today’s rate hike.

Households concerned about debt are being urged to seek help as Bank of England rate hikes push mortgage payments higher.

Joanna Elson CBE, chief executive of Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: “Storm clouds are gathering for many households as today’s rise in interest rates comes a day after inflation picked up again in February.

“For homeowners who are already struggling, further increases in mortgage costs will be a big problem, especially for those with adjustable rates or who are at the end of their contracts.”

She said tenants would also feel the pressure as landlords pass prices on to tenants.

“I would encourage anyone concerned about their mortgage repayments to contact their lender as soon as possible. You can also contact a free debt advice service like National Debtline or Business Debtline,” she said.

Anna Leach, deputy chief economist for the CBI business group, said the Bank of England’s decision to hike rates was a “difficult matter for the MPC”.

She said it took place “against a backdrop of the recent global financial market turmoil, a surprise surge in domestic inflation and a budget that is more supportive of the economy.”

She added: “The MPC will also keep a close eye on the recent turmoil in the banking sector.

“While financial stability is the FPC’s remit, excessive tightening in credit conditions for businesses and households due to financial market turmoil could prompt the MPC to reconsider interest rate levels in the coming months.”

The FTSE 100 stayed low after the interest rate decision, having fallen 66 points before the decision.

Banks were among the worst performers as London’s top index was down 0.8 per cent at around 7,506 points following the decision.

Following the Bank of England’s recent rate hike, Chancellor Jeremy Hunt said: “With rising prices stifling growth and eroding family budgets, the sooner we get inflation under control, the better off for everyone.

“That’s why we support the Bank of England’s actions today and will continue to do our part in this fight by managing public finances responsibly and providing cost-of-living support worth an average of £3,300 per household this year and next. “

The bank said the Chancellor’s budget last week influenced the below-expected 0.25 percent increase, particularly the extension of the energy price guarantee.

The pound edged higher after Bank of England interest rates rose.

Sterling was already around 0.3 percent higher against the dollar prior to the announcement but continued to gain, to trade 0.5 percent at 1.232 after the hike was confirmed.

The pound was also higher against the euro, rising 0.25 percent to 1.132.

The Bank of England rate hike could come as a shock to those who follow forecasts of falling inflation.

In a statement, the bank said the 0.25 percent rise was an exercise of caution, keeping an eye on high inflation but anticipating the expected fall.

“This lower than expected rate is largely due to the short-term news in the budget, including the EPG, alongside the fall in wholesale energy prices.

“Services CPI inflation is expected to remain broadly unchanged in the near term, but wage growth is likely to decline at a slightly faster rate than the February report forecast,” the bank said.

According to an economist, the Bank of England risks pushing Britain into a “full-blown recession” as interest rates rise.

Joe Nellis, Professor of World Economics at Cranfield School of Management, reacted to the Bank of England’s interest rate decision as follows: “The Bank of England’s decision to raise interest rates to 4.25 percent could plunge the economy into a full-blown recession .

“A growth recession was inevitable before the rise, but the MPC’s vote will only delay any prospects of an economic recovery. Why did the monetary policy committee vote to make matters worse?

“Households are already facing the biggest drop in their living standards in many decades and the banking sector is under pressure. Further rate hikes will do more harm than good at this stage.”

The Bank of England has raised interest rates from 4 percent to 4.25 percent.

They made the decision after official figures earlier this week showed a surprise rise in consumer price index (CPI) inflation in February and they thought Britain’s gross domestic product (GDP) was likely to outperform previously thought.

Two members, Swati Dhingra and Silvana Tenreyro, voted against the hike, arguing that some of the recent rate hikes have yet to seep through to the real economy.

Seven members of the Bank of England’s Monetary Policy Committee (MPC) voted to raise interest rates from 4 percent to 4.25 percent.