The Bank of England raises interest rates again to 5.75%
The Bank of England has raised the Base Rate from 5.5% to 5.75%, the fifth increase since August last year.
The higher rate will mean most mortgage lenders will increase the repayments on their standard variable rate homeloans, adding about £16 a month to an average £100,000 repayment mortgage.
Price comparison website uswitch.com has calculated that the two rate rises that have already been made in 2007 have cost homeowners an additional £433 a year in higher mortgage repayments, but that the current rise will see them out of pocket by £677.
Many charities have expressed fears that the latest rise will precipitate severe difficulties for those borrowers already hard-pressed to make ends meet each month and that repossessions could increase as a result.
“We’re seeing more and more people coming in for help with mortgage or secured loan arrears,” said Sue Edwards of Citizens Advice.
“People are really stretching themselves to the limit to buy a house and take on a mortgage, so a small increase in interest rates could just tip them over the edge into real financial trouble,” she told the BBC.
Mike Naylor at uswitch.com said: “The impact of three Base Rate rises this year should not be underestimated – this is going to hurt a lot of households, especially those with variable rate mortgages. It is important at this time for people to take control of their finances.”