More mortgage misery for homeowners as interest rates set to rise for the 15th time in a row
Homeowners face further mortgage misery as a forecast predicts Britain will suffer the worst inflation of all advanced economies this year.
The Organization for Economic Co-operation and Development (OECD) raised its outlook for average UK inflation in 2023 from 6.9 per cent to 7.2 per cent, and said the Bank of England must remain “vigilant” to address it.
It comes as the Bank is expected to raise interest rates again tomorrow – the 15th consecutive increase.
Hopes are growing that a global cycle of rate hikes is peaking. Some business leaders think that – with fears of a looming recession – the Bank of England has done enough and should stop raising rates.
However, financial markets see a more than 80 per cent chance of UK interest rates rising from 5.25 per cent to 5.5 per cent this week.
Financial markets see a more than 80 percent chance that UK interest rates will rise from 5.25 percent to 5.5 percent this week (file photo)
And Paris-based OECD chief economist Clare Lombardelli – former Treasury chief – urged caution about the outlook for advanced economies.
“Although inflation is falling, it is still too high and there are reasons to be concerned about its persistence,” he said.
He said that even if rates have peaked, they “will need to remain restrictive until there is evidence that underlying inflation pressures are lastingly easing,” limiting the scope for rate cuts “well into 2024 in most cases.” of advanced economies”.
Ms Lombardelli added: “The Bank of England, like other central banks around the world, is right to be very attentive to what the data shows and react to the data as it emerges.”
“They are taking the right steps by raising rates to this point and then looking forward and judging the data as it emerges.” The battle against inflation is already hurting UK borrowers, many of whom have seen their monthly mortgage bills rise by hundreds of pounds.
The Organization for Economic Co-operation and Development (OECD) upgraded its outlook for UK average inflation in 2023 from 6.9 per cent to 7.2 per cent (file photo)
Figures published by the consumer group ¿Qué? yesterday signaled festive misery for half a million borrowers when their cheapest fixed rate deals come to an end in November, December or January.
Many families will have to upgrade to higher rates at the most expensive time of year.
Britain has been slower than rival economies such as the United States and the eurozone in reducing inflation after it peaked following Russia’s invasion of Ukraine.
It averaged 9.1 percent last year and the expected rate of 7.2 percent this year will be the steepest pace of price increases in any of the G7 economies.