Home Politics Bank of England’s interest rate hike: Homeowners tell of their misery

Bank of England’s interest rate hike: Homeowners tell of their misery

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Victoria Williams, a business owner from Cullercoats in North Tyneside, is dismayed by the Bank of England's interest rate rise.

Homeowners and house hunters told MailOnline of their misery today as the Bank of England raised interest rates to a 15-year high of four per cent.

Business owner Victoria Williams, who took out a variable mortgage last month, will now have to pay almost £1,000 more a year because of the announcement.

Meanwhile, NHS worker Rachel Bennett, who has already been struggling to buy a house with her husband, Jack, says it may now be an impossible dream.

She told MailOnline: ‘It’s almost impossible to get up the property ladder and now rates are going up even more. “It is an incredibly frustrating situation.”

Victoria Williams, a business owner from Cullercoats in North Tyneside, is dismayed by the Bank of England’s interest rate rise.

Miss Williams, who is buying a property on her own, decided to take a chance and opted for a tracker at 0.80 per cent above the base rate.

The 39-year-old, who is five and a half months pregnant, had expected rates to stay the same or rise only slightly before falling, so she was shocked to learn of the increase.

Miss Williams, of Cullercoats, North Tyneside, predicted she would face around £960 in additional costs.

“I had the option of signing a fixed-term contract for a minimum of two years at around six per cent, or opting for a tracker,” he said.

“I knew it was a risk at the time, but if the base rate had stayed at 3.5 per cent I would have been earning hundreds of pounds a month.”

‘With a baby on the way, I have to bear all kinds of costs and every penny counts. I’m also buying on my own, so I don’t have anyone to share the mortgage with.

‘I’m moving from a two-bedroom apartment to a three-bedroom house and my mortgage payments will now triple.

‘My heart sank when I heard the news on the radio this morning, and I feel that first-time buyers will now be completely priced out of the market.

‘I’m very lucky that this won’t paralyze me, but I work hard and that means making sacrifices at a time when I should be looking forward to welcoming my new baby.

“I shudder to think what will happen if it continues to rise.”

'Rising rates could mean we will never be able to afford our own home': Rachel Bennett, 31, with husband Jack (right) and children Noah, 10, and Lacey, four.

‘Rising rates could mean we will never be able to afford our own home’: Rachel Bennett, 31, with husband Jack (right) and children Noah, 10, and Lacey, four.

Rachel Bennett, 31, lives in South Yorkshire with her project manager husband Jack, 32, and their two children Noah, 10, and Lacey, four.

They currently rent a two-bedroom semi-detached house from a housing association and the couple are forced to share their bedroom with their daughter.

Despite finding a “lovely property” in the local area, they were told the 10 per cent deposit they offered was not high enough, preventing them from going ahead with the purchase.

Mrs Bennett says rising rates would “potentially” be the difference between her and Jack being able to buy their first home.

She told MailOnline: ‘We have some savings but not much as we can’t save much each month due to rising costs and having children.

‘We both work very hard for our money and my husband has a well-paid job and excellent store credit.

The Bank of England raised interest rates today from 3.5 to 4 percent

‘The only thing we want is to buy a place and leave something for our children when we are no longer here.

‘I worry about what the world will be like when they are adults and probably even harder to buy a house. “It’s extremely stressful and discouraging.”

The base rate has been pushed from 3.5 percent to 4 percent in the latest move, the 10th consecutive increase.

It is the highest level since 2008, leaving mortgage payers counting the cost as the Bank struggles to contain runaway inflation.

The change will add £50 to borrowers’ average mortgage payments.

However, there are hopes that the tightening cycle is coming to an end, as the Monetary Policy Committee (MPC) attempts to balance the slowing economy against the threat of a price spiral. Governor Andrew Bailey said inflation appeared to have “turned a corner” but that it was “still too early to claim victory.”

Bank of England Governor Andrew Bailey said inflation appeared to have

Bank of England Governor Andrew Bailey said inflation appeared to have “turned a corner” but that “it is still too early to claim victory.”

The Bank has also sharply lowered its dire estimates for the economy, although it still predicts a shallow recession.

Bailey pointed to the huge rise in economic inactivity among the over-50s post-Covid, warning that until now there was little sign that people were returning to work.

Chancellor Jeremy Hunt said he supported the Bank’s decision and gave another forceful rebuttal to Tory MPs pushing for tax cuts soon.

“We will do our part by ensuring that government decisions are in line with the Bank’s approach, including resisting the temptation right now to finance additional spending or tax cuts through borrowing, which will only add fuel to the fire of inflation and “It will prolong the pain for everyone,” he said in a statement.

Speculation has grown that rates could peak at 4.5 percent or 4.25 percent next month, before falling again.

The Bank raised its outlook for the economy from its previous forecast of a recession lasting eight quarters, which would have been the longest since reliable records began in the 1920s.

It now expects a five-straight quarter recession with GDP falling 0.5 percent this year, a shorter and shallower decline than previously thought.

The Bank said the recession will lead to a 1 percent drop in GDP, compared with a previous forecast of a 3 percent drop.

GDP is believed to have increased by 0.1 percent in the final quarter of last year, but will contract in all four quarters of this year and in the first quarter of 2024.

The 0.5 per cent drop forecast for calendar year 2023 is a reduction of one percentage point from the MPC’s November forecast. But production will not return to pre-pandemic levels until 2026.

Bailey expressed some optimism earlier this month, suggesting that the country’s inflation problems have taken a step back.

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