Millions of homeowners face a ‘mortgage time bomb’ as fixed-rate loans expire, according to experts, after the Bank of England imposed the fastest interest rate rise since 1997, with experts predicting it could reach 4% or higher by the end of the year.
Governor Andrew Bailey also predicted that the UK will enter a year-long recession by the end of 2022, the longest since the 2008 financial crisis and as deep as the one in the 1990s.
His doomsday prediction also stated that inflation will now peak at more than 13% – 11 percent higher than his own target – fueled by the soaring price of gas and fuel this winter.
In an effort to rein in spiralling inflation, the Bank raised interest rates by 0.5 percentage point yesterday, the largest increase in 27 years.
Its base rate, which banks use to determine mortgage rates, has risen to a 13-year high of 1.75 percent, from 1.25 percent. As a result, approximately 2 million homeowners with tracker or variable rate loans will face eye-watering mortgage bill increases.
Governor Andrew Bailey has admitted that rising inflation ‘concerns me the most,’ amid political criticism of the bank’s slow response to the current economic turmoil.
‘We are in the centre of things because of what is going on in the world at large and the impact that is having on inflation,’ he said.
‘I think it’s important that there is a full debate during this process to choose the next prime minister of this country.