Homeowners warned of ‘significant’ rise in UK interest rates
Britain’s homeowners have been warned to brace themselves for a “significant” increase in interest rates from the Bank of England in response to Kwasi Kwarteng’s tax-cutting mini-budget last week.
Huw Pill, Threadneedle Street’s chief economist, added to the concerns of millions of mortgage payers who have already seen hundreds of home loan products pulled by lenders in anticipation of a big increase in the cost of borrowing.
With the financial markets signalling that the Bank might need to raise interest rates as high as 6%, Santander, HSBC and Nationwide were among the big lenders indicating that the end of cheap mortgages was coming to an end.
Roughly one in 10 deals have disappeared this week according to the online mortgage platform Dashly. On Monday there were 7,490 residential and buy-to-let mortgage products available but by Tuesday evening there were 6,609, a drop of nearly 12%.
The Bank of Ireland, Clydesdale Bank, Post Office Money and a slew of building societies including Monmouthshire, Furness and Darlington were among those withdrawing products.
Pill sought to play down the possibility of an emergency rate hike from the Bank before the next scheduled meeting of its nine-strong monetary policy committee in early November.
But he made it clear a sizeable increase in official interest rates from their current 2.25% was in prospect – a move that will affect borrowers on floating-rate mortgages and those whose fixed-rate deals are ending.
“In my view, a combination of the fiscal announcements we have seen will act as a stimulus to demand in the economy,” Pill said of the mini-budget. “It is hard not to draw the conclusion that this will require a significant monetary policy response.”
The pound again struggled in late
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