NO RATE BREAK
Bank freeze hits mortgage borrowers
BANK of England Governor Andrew Bailey says “things are moving in the right direction” but the base rate was yesterday held at a 16-year high of 5.25%.
None of the Bank Monetary Policy Committee’s nine members voted for a rate rise. The clearest sign yet that a cut is coming.
But this will be little comfort for the millions of mortgage borrowers who have, or are about to, come off cheap fixed-rate deals and are facing a financial hammering.
Mr Bailey said: “We’re not yet at the point where we can cut interest rates, but things are moving in the right direction. “Inflation has come down. But we have still got some way to go.” Financial markets have a 50-50 chance that the first cut will be June, with a fall to 4.5% by the end of the year. The Bank previously hiked rates to try to cool inflation, which soared to 11% in October 2022. Inflation fell to 3.4% last month, after the biggest drop since 1978, but remains above the Bank’s 2% target.
The Tories are desperate for the Bank to start cutting rates to claim the economy is on the mend ahead of a general election. Laith Khalaf, of City firm AJ Bell, said: “The Bank won’t want to cut rates, only to have to hike them again.”
David Cheadle, of National Debtline charity, said: “High interest rates are impacting more families, as mortgage payers come to the end of fixedrate deals meaning their monthly payments increase significantly.”
He said landlords are passing on higher costs to renters.
British Chambers of Commerce’s David Bharier said the freeze “prolongs the period of uncertainty for firms grappling with high borrowing costs”.