Bank of England hikes interest rates to 5%, stoking fears of a ‘mortgage bomb’
1 year, 6 months ago

Bank of England hikes interest rates to 5%, stoking fears of a ‘mortgage bomb’

CNN  

London CNN — The Bank of England raised interest rates by half a percentage point Thursday, after data this week revealed surprisingly stubborn inflation. “We are committed to returning inflation to the 2% target and will make the decisions necessary to achieve that.” Financial markets now expect the Bank of England’s benchmark interest rate to reach 6% around the turn of the year — a level not seen in two decades — in the ever more desperate battle to control rising prices. “The latest moves in market interest rates suggest that a dire outlook for UK mortgagors just got worse,” Simon Pittaway, senior economist at the Resolution Foundation, a think tank, said in a report. “So far, the housing market hasn’t seen a material change in behavior, although anxiety levels are rising,” said Tom Bill, head of UK residential research at real estate agent Knight Frank. “If mortgage rates were to stay at 6% for several years, a house price fall of 25% would be likely,” Wishart said.

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