The Bank of England has raised interest rates to a 15-year-high, piling further pressure on mortgage holders.
Rates went up to 4.25 per cent in the 11th consecutive rise, after yesterday’s shock jump in inflation outweighed fears of a banking crisis that has rocked the financial world.
The Monetary Policy Committee moved in the light of similar hikes by the Federal Reserve, Swiss central bank and Norges Bank in the hours before members were called to vote.
Experts had warned that rising interest rates were partly to blame for bank collapses in the US and the plight of Credit Suisse, as account holders withdrew their money to avoid expensive borrowing.
Stuart Gregory, managing director of Lentune Mortgage Consultancy, warned a rate rise will cause “more damage”.
“Millions of borrowers are looking at double or triple their current mortgage outgoings this year as their low rates end. No-one wins – as Landlords will need to pass this on as well,” he said.
Mortgage rates have fallen to a six-month low from their peak in the weeks after September’s “mini-Budget”, according to MoneyFacts.com. But, a spokesperson for the site said, today’s rate hike could cause lenders to reverse this drop.