The Bank of England has announced its biggest interest rate hike in 33 years today – adding an average £1,100 a year to mortgage bills for hard-pressed West of England residents.
The Bank voted to up its rate by 0.75 percentage points – from 2.25% to 3% – to try to cool runaway inflation – the eighth consecutive jump in interest rates.
This is the highest rates have been since 2008 during the Global Financial Crisis. Less than a year ago, the rate was 0.1 per cent.
The hike will push up by hundreds of pounds the amount that mortgage holders have to pay every month, say industry experts.
The average mortgage borrower on a standard variable rate of 5.86% with a £200,000 loan over 25 years will be paying £1,364 per month (from £1,271 per month) which equates to an extra £1,111 every year – even before any other possible rate rises – according to Moneyfacts.
Metro Mayor Dan Norris said the hike – the biggest interest rate increase since 1989 – would mean more financial misery for hard-pressed West of England families and showed the economy had “left the road and ended up in a ditch” under the Conservative Party. He said: “Today’s interest rate hike means higher mortgage rates and yet more financial misery for hard-pressed West of England families, and increased anxiety for thousands. Under the Tories, the economy has left the road and ended up in a ditch, and it’s Bristolians paying the price. They’ve sent mortgages and prices sky-high and damaged the UK’s reputation on the world stage with their disastrous mini-budget, but how do they repay working people? Through yet more tax rises and public spending cuts. That is the reality for the West of England now, and it’s only getting worse, not better. Enough is enough. The 12-year Tory circus destroying our economy must end. It’s time for stability with Labour – general election, now”.