The 0.25 percent increase – a “bitter blow” to London homeowners – was an unprecedented fourth increase over the Bank’s Monetary Policy Committee (MPC).

By a majority of 6 votes to 3, the committee voted to raise the rate by 0.25 percent. Three dissenting MPC members wanted more growth of 0.50 percent.

Bank interest rate now the highest since March 2009, when the recession that followed the global financial crisis led to an extraordinary minimum of the cost of the loan to save the world savings afloat.

The move came after the US Federal Reserve raised its key rate by 0.5 percent on Wednesday, the biggest increase in 22 years.

The bank said the increase on Thursday was necessary in order to dominate insane inflationwhich reached seven per cent in March and is now expected to reach nine per cent in April, when the limit on electricity bills rose by 54 per cent and peaked at 10 per cent in the autumn.

But it will mean a big extra burden for homeowners and businesses at a time when they are already struggling with rising prices for energy, fuel and food.

The bank also sharply downgraded its forecasts for economic growth, which is expected in 2023 by 0.25 percent as a result of disruptions caused by the war in Ukraine.

Bank of England chief Andrew Bailey said household disposable income is expected to fall 1.75 per cent this year.

He added: “I am aware of the difficulties this will cause for many people in the UK, especially for those with the lowest incomes.”

He also warned of a further rise in interest rates, saying “some degree of further tightening of monetary policy may be appropriate in the coming months”.

The Bank of England The move will lead to an immediate increase in the cost of housing for about one in four households that has mortgages, discounts or variable rates that move at the base rate of the Bank of England.

For a homeowner with a typical 25-year mortgage in London of £ 250,000, the monthly bill will rise by around £ 35 from £ 1,353 to £ 1,388. For a borrower with a larger mortgage of £ 500,000, the monthly payments will increase by around £ 70 from £ 2,706 to £ 2,776.

For most fixed-rate mortgage holders, this decision, which was expected by weather forecasters, will not be immediately different.

However, if their current trades come to an end, they will have to re-bet at rates much higher than those they fixed in their existing trades, especially if they are on two-year trackers.

Fixed rates hit a low last summer and fall when the Bank of England base rate was just 0.1 per cent. It started growing in December when it rose to 0.25 percent. At the February and March meetings of the MPC there were additional trips for a quarter of a point.

At their bottom point fixed mortgage rates were well below one percent.

On Wednesday, c best available prices for borrowers with a 25 percent deposit wishing to fix within two years, there was 2.29 percent from First Direct. Borrowers with only a 10 percent deposit can fix 2.49 percent with the same lender.

Borrowers looking for peace of mind for five years can fix a rate of 2.3% in Barclays if they have a 25% deposit, or 2.64% in First Direct if they have only a 10% prepayment.

Paul Johnson, director of the Institute for Fiscal Research, previously warned of the impact on people’s mortgage series interest rates trip to the Bank of England

He told today’s BBC Radio 4 program: “It can double your mortgage interest payments over a period of time, so even small changes now, at least after people go through certain fixed rates, can have a really big impact on people who received significant mortgages.

“Homes on the border cannot be ignored”

Liberal Democrat MP Sarah Olney said London residents would be “unfairly affected” by the recent rise because the “out-of-control housing market” in the capital has forced homeowners to take out much more mortgages than elsewhere. Great Britain.

A poll commissioned by the Liberal Democrats found that 54 percent of homeowners said the government was not doing enough for them to afford mortgage costs.

The Liberal Democrats are calling for a new emergency mortgage support fund to support homeowners who are on the border.

Ms. Olney, a Richmond Park MP and spokeswoman for the Liberal Democrats, said: “I am most worried about families who have been stingy and saved to get on the housing ladder when rates are rising. They need help now, but all they get from this government is endless tax increases and empty promises.

“I urge the Chancellor to reduce taxes and introduce a safety net for families who cannot afford to raise their mortgages. This government can no longer ignore homeowners who are on the border. ”

Cory Askew, head of Chestertons sales, says: “Despite previous interest rate hikes this year, the number of buyers enrolling has only increased, having recently risen 39 per cent in April compared to April 2021. With the next increase and the Bank of England setting a target base rate of 1.5 per cent by the middle of next year, the rate hike only served to boost buyers ’motivation to secure their purchases quickly.”

David Johnson, managing director of INHOUS’s independent real estate consultants, says: “In the main housing market there is no doubt that the recent increase in interest rates in this series will affect homeowners. Many of those we talk to believe that a recession is inevitable.

“In London, rising interest rates will affect those buyers who have been buying for the past five or six years and paying a premium for it. At prices of £ 2 million to £ 8 million the market was very competitive and most buyers needed financing and paid high prices to secure their homes.

“We could see how these homeowners will struggle at a later stage when there will be some more interest rate hikes, but that won’t happen any time soon. It also depends on what finances they took; if they choose a medium- or long-term fixed rate mortgage, they may be fine, but if they choose a variable rate, it can be a nervous period for them. ”

https://www.standard.co.uk/news/uk/interest-rate-rise-bank-of-england-inflation-cost-of-living-b998137.html

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