Interest rates – live: Mortgage timebomb fears as Bank of England raises interest rates

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Jeremy Hunt vows to follow Tory plan to battle inflation ‘no matter the pressure’

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The Bank of England has risen interest rates for the 13th time in a row in a further blow to homeowners struggling with catapulting mortgages.

It comes as the rate of inflation remains unexpectedly stubborn – frozen at 8.7 per cent last month.

Analysts had expected the Consumer Prices Index, which peaked at 11.1 per cent in October last year, to fall back to 8.4 per cent.

Bank of England chief Andrew Bailey is under fire from chancellor Jeremy Hunt’s economic advisers for failing to curb inflation.

Top economists accused Mr Bailey – who claimed there would be a sharp fall in inflation three months ago – of worsening the mortgage crisis by previously being too slow to act on persistent price rises.

Karen Ward, a member of Mr Hunt’s economic advisory council, said the Bank would now have to trigger a recession to finally tame the inflation problem. “There’s no other way around it.”

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Mortgage lenders say they are ready to support customers

Mortgage lenders said they are ready to support customers, as the Bank of England base rate rose for the 13th time in a row, pushing up some borrowers’ costs by hundreds of pounds more per year.

Homeowners whose mortgages directly track the base rate will see their monthly payments jump by around £47 on average as a result of Thursday’s unexpectedly steep rate hike from 4.5% to 5%.

Trade association UK Finance said the average tracker mortgage payment will increase by £47.43 per month, adding up to £569.16 annually.

Taking all 13 base rate rises into account, the average monthly tracker mortgage payment will have increased by £464.79 – adding up to average tracker mortgage payment increases of £5,577.48 annually.

David Postings, chief executive of UK Finance, said: “Lenders are ready to support customers who are feeling the strain from the rising cost of living.

“Over 80% of homeowners are on fixed-rate deals and will be protected from any immediate rise in mortgage repayments following the bank rate increase.

“Those customers who are due to come off their fixed rates later this year are, however, likely to face higher monthly repayments.

“Lenders are prepared to help anyone struggling with their mortgage payments.

“If you are worried about your finances, do get in touch with your lender early to discuss the options available.

“They have teams of experienced and understanding advisers who will develop a solution tailored to your individual circumstances. Making a call to your lender to discuss the options available will not impact your credit score.

“Importantly, the level of homeowners in arrears remains low, meaning that most households are able to keep up with their monthly payments.”

Maryam Zakir-Hussain22 June 2023 13:301687436803

Rishi Sunak vows government will ‘remain steadfast’ in promise to reduce inflation

Rishi Sunak has vowed the government will “remain steadfast” in its course to bring down inflation.

Speaking at the Times CEO summit in London, the Prime Minister said: “The reason interest rates are going up is because inflation is too high and we’ve got to bring it down.

“This is something that makes everybody poorer, that’s what inflation does.

“That’s why we’ve got to grip it, we’ve got to reduce it and interest rates are a part of that.

“Now, I always said this would be hard – and clearly it’s got harder over the past few months – but it’s important that we do do that.

“The Government is going to remain steadfast in its course and stick to its plan to do that.”

Maryam Zakir-Hussain22 June 2023 13:261687435514

Martin Lewis gives verdict on spiralling interest rates

Consumer champion Martin Lewis has given his verdict on the Bank of England’s decision to raise interest rates by 0.5 per cent, spelling further pain for mortgage holders.

The central bank’s base rate now sits at 5 per cent, after its monetary policy committee opted for its 13th consecutive hike since March 2020, as Bank officials seek to tame decades-high levels of inflation.

While markets had been bracing for a base rate rise of 0.25 per cent, fears of a more severe hike were heightened on Wednesday after official figures showed inflation had failed to fall – while, worryingly, core inflation – which excludes food and energy – hit a 31-year high.

Martin Lewis gives verdict on Bank of England interest rate hike

‘One-trick method causing huge pain’ to those with mortgages, Martin Lewis warns

Maryam Zakir-Hussain22 June 2023 13:051687434041

Jeremy Hunt: ‘We’ll get to the other side’

A defiant chancellor Jeremy Hunt has said that “if you stick to your guns, you bring inflation down”.

The chancellor said the “single most important thing any government can do is be responsible with public spending”, vowing to avoid “unnecessary borrowing”.

Ruling out direct support to mortgage holders, Hunt said: “Nor, sadly, can we offer short-term mortgage support if it means inflation stays higher for longer. It would be self-defeating.”

He added: “If you look at what’s happening in other countries, you can see that rises in interest rates do bring down inflation over time. That will happen here. But we need to be patient. If we stick to the plan, we’ll get to the other side.”

Maryam Zakir-Hussain22 June 2023 12:401687433532

Keir Starmer warns homeowners: ‘Next month is going to feel a lot worse’

Sir Keir Starmer warned that “next month it’s going to feel a lot worse” for millions of homeowners.

The Labour leader said that he will personally be affected by the expected interest rate rise.

Speaking just ahead of the announcement, he said: “Within an hour now just across the river, the Bank of England will take a decision that will underline with emphasis the reality of where we stand as a nation, and also the fact that we now live in a new economic era,” Sir Keir told the Times CEO summit in London.

Asked whether the expected rate hike will affect his household, he said: “Yes, it will affect our mortgage, it has already affected our mortgage in the last 12 months. So we will see that go up.”

He said that will be a “shared experience” and that it is “a real problem” for those struggling to make ends meet.

“Next month is going to feel a lot worse than it feels now, and as many people have said to me, if you’ve got only the mortgage going up, that might be bearable, but it’s alongside the energy bills going up, the food bill going up.”

Maryam Zakir-Hussain22 June 2023 12:321687433172

Rachel Reeves accused of PM and chancellor of ‘burying their heads in the sand'

Shadow chancellor Rachel Reeves accused Jeremy Hunt and Rishi Sunak of “burying their heads in the sand” about the mortgage misery facing householders.

“Families across Britain will be desperately worried about what today’s interest rate rise might mean for them,” she said.

“They want to know that support will be there if they need it.

“Instead, the Chancellor and Prime Minister are burying their heads in the sand and failing to clean up the mess this Tory government has made.”

Maryam Zakir-Hussain22 June 2023 12:261687432829

‘If we don’t act now, it will be worse later’: Jeremy Hunt responds to rise in interest rate

Responding to the interest rate rise, chancellor Jeremy Hunt said: “High inflation is a destabilising force eating into pay cheques and slowing growth.

“Core inflation is higher in 14 EU countries and interest rates are rising around the world, but the lesson from other countries is that if you stick to your guns, you bring inflation down.

“Our resolve to do this is watertight because it is the only long-term way to relieve pressure on families with mortgages. If we don’t act now, it will be worse later.”

Maryam Zakir-Hussain22 June 2023 12:201687432727

‘Interest rate hike puts enormous pressure on mortgage holders’

Dr George Dibb, head of the centre for economic justice at IPPR, said: “This interest rate rise risks doing more harm than good. The Bank of England has been forced to take action because of government inaction. This will put enormous pressure on mortgage holders, and we are now on the precipice of intentionally pushing the economy into recession.

“Instead of further rate rises, we need a more balanced set of policies, including more fiscal policy action, to address the persistence of inflation. This should involve further price support measures to lower energy prices, excess profits taxes to disincentivize excessive price increases, and income support to help smooth out wage adjustments.”

Maryam Zakir-Hussain22 June 2023 12:181687432547

Interest rate rise is sharpest hike since February

The Bank of England has unexpectedly pushed up interest rates to 5%, the sharpest hike since February in a bid to control persistent inflation.

Seven members of the nine-person Monetary Policy Committee (MPC) opted for a 0.5 percentage point increase, taking the rate to 5% from 4.5%. Two members voted for no change at all.

The Bank said the hike was required because wage growth and services inflation, indicators which policymakers watch closely, have remained elevated.

The decision will come as a surprise to financial markets which had been pricing in a smaller rate hike of 0.25 percentage points.

Some economists cautioned that an “aggressive” tightening of monetary policy would fuel the mortgage crisis as rates have steepened in recent weeks.

Maryam Zakir-Hussain22 June 2023 12:151687432469

Bank of England’s Andrew Bailey has Sunak’s support

Bank of England Governor Andrew Bailey has the Prime Minister’s support, Downing Street has said.

But No 10 would not go as far as saying had done a good job in tackling inflation.

A No 10 spokesman said: “The Prime Minister thinks is important that we continue to support the Bank in the work they are doing.

“You’re aware that there’s an independent process for setting interest rates, and we continue to work closely with them and work well with them to bring down inflation.”

The spokesman said that Mr Bailey “continues to have the Prime Minister’s support”.

“It’s right that we continue to support the Bank of England as they take the independent decisions on interest rates.”

Maryam Zakir-Hussain22 June 2023 12:14

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