ECONOMISTS are warning the Bank of England not to hike interest rates again today — amid fears of a slowdown.
Officials are predicted to raise the base rate for the 14th time in a row to 5.25 per cent, adding yet more to monthly repayments.
AFPEconomists urged BoE governor Andrew Bailey to wait for past rate rises to take effect before hiking up mortgages for millions[/caption]
But the Institute of Economic Affairs urged governor Andrew Bailey to wait for past rate rises to take effect before hiking up mortgages for millions.
Trevor Williams, chair of its Shadow Monetary Policy Committee, said it is “unnecessary and could do some economic damage without lowering inflation any faster”.
Earlier this week, UK lenders cut their fixed mortgage deals, suggesting rates may be close to peaking.
But there are signs the UK economy is slowing — with house prices last month falling at their fastest annual rate in 14 years.
PM Rishi Sunak has said families can “see the light at the end of the tunnel” of inflation, currently at 7.9 per cent.
But he admitted the UK’s rates were not going down “as fast as I would like”.
The PM told LBC: “But the numbers most recently showed that we’re heading in the right direction, inflation is coming down.”
He told a caller named Jack, who is facing a huge increase in his monthly payments from £1,500 to £2,800 a month, to talk to his bank about spreading out the costs or going interest-only.
And the PM suggested that taking out a longer loan would be better than repossession saying: “We don’t want people to lose their homes.”
Jack replied: “I’m already on a 35-year term. I’m in my early 30s. I don’t want to be paying it off until I’m in the grave.”
One of Britain’s major housebuilders warned yesterday more are being forced to take on longer terms to cope with the higher costs of borrowing.
Taylor Wimpey said the share of first-time buyers taking on mortgages of more than 36 years had tripled since 2021 – and was now one in four of them.