Interest rates – live: Rates hit 15-year high as ‘mounting cash pressures’ push Wilko to brink of collapse

The Bank of England has pushed interest rates to a fresh 15-year high, as it announced its 14th consecutive rise in the cost of borrowing.

The central bank raised its base rate by a further 0.25 points to 5.25 per cent on Thursday, the highest level since February 2008, as part of its ongoing bid to tame inflation by cooling Britain’s economy.

It comes despite the latest inflation statistics suggesting price rises had finally slowed by a greater margin than anticipated, with CPI inflation falling from 8.7 per cent in May to 7.9 per cent in June – the lowest rate since March 2022.

As economists eyed an end to the cycle of interest rate hikes, high street retailer Wilko filed for administration, putting some 12,000 jobs at risk. Having agreed a deal last year to borrow £40m from restructuring specialist Hilco, the firm said it was now facing “mounting cash pressures”.

Insolvencies in England and Wales surged last quarter to their highest level since the financial crisis, as firms were hit by tighter consumer budgets and rising borrowing costs.

Key Points

  • Bank of England hikes interest rates to 5.25%

  • Wilko to enter administration as it faces ‘mounting cash pressures'

  • Economists eye an end to lengthy cycle of rate increases

  • Rishi Sunak believes ‘light at end of the tunnel’ on inflation

17:01 , Katy Clifton

We are pausing our live coverage for the evening, but you can check out more on today’s interest rate hike here.

Bank of England may be forced to raise rates even as US and EU drop theirs, warns analyst

16:29 , Andy Gregory

The UK’s “exceptionally high” rate of core inflation means the Bank of England may have to keep raising rates even as the EU and US begin to loosen their own monetary policy, an analyst has warned.

“The Bank of England opted for a 25bps rate hike to 5.25%, bringing their policy rate to its highest level since March 2008,” said Erik Norland, senior economist at CME Group.

“Over one quarter of economists polled by Bloomberg expected a 50bps hike, a view that was likely influenced by the UK’s exceptionally high rate of core inflation. UK core inflation remains at 6.9 per cent, compared to 5.5 per cent in the Eurozone and 4.8 per cent in the US.

“Unless UK core inflation eases in coming months, the Bank of England may have to continue raising rates in coming meetings even as its peers across the Channel and across the Atlantic perhaps slow or halt their pace of increases.”

Rachel Reeves sets out what Labour would do ‘differently from the government’

16:00 , Andy Gregory

Rachel Reeves has explained what Labour would do “differently from the government” in terms of economic policies.

The shadow chancellor was told on the BBC Radio 4’s World At One programme “a lot of people struggle to see much difference between your plans and the Conservatives”’

Ms Reeves said: “First of all, the government have got a voluntary scheme with banks and lenders to help people with mortgages who are in financial difficulty. That should not be a voluntary scheme. Banks and lenders should be forced to take part in that, otherwise hundreds of thousands of people getting into financial difficulty with their mortgages risk falling through the gaps.

“Second, obviously we are talking about mortgages and rents today, but the truth is that energy prices are still much higher than they were before Russia’s invasion of Ukraine, and the energy companies continue to make large profits.

“We would tax those properly by closing some of the loopholes in the government’s windfall tax on the energy giants and use that money to help people with their bills.

“Those are two practical things that we would do differently from the government right now. But the truth is we are in these problems today because of a decade or more of economic mismanagement, and we need to do more to get our economy back on the right path.”

Tracker mortgages to increase by nearly £24 a month after latest rate rise

15:38 , PA

Mortgage holders on tracker deals face nearly £24 per month being added to their payments, on average, following the latest Bank of England base rate rise, reports Vicky Shaw.

Based on the mortgages outstanding, the new 0.25 percentage point rise, which takes the base rate to 5.25 per cent, will add on £23.71 typically to monthly tracker payments, according to figures from trade association UK Finance, adding up to nearly £285 per year.

For homeowners on a standard variable rate (SVR) mortgage, the average payment could increase by £15.14 per month, or nearly £182 per year. SVRs are set by individual lenders and often follow movements in the base rate.

Taking all of the past 14 base rate rises since December 2021 into account, average monthly payments will have increased by £488.50 for tracker deals and, assuming base rate rises have been fully passed on, £311.90 for SVRs.

This adds up to an average annual increase of £5,862 for homeowners on tracker mortgages and £3,742.80 for SVR customers.

Inflation hurts lower-income households most, says Andrew Bailey

15:09 , Andy Gregory

The governor of the Bank of England has emphasised that inflation hurts lower-income households the most, which is why the Bank has opted for “restrictive” monetary policy.

Andrew Bailey said: “We do recognise, and I think it’s very important to say, that inflation has a very serious effect particularly on those least well off.”

The main components of inflation, energy and food, make up a bigger portion of spending for lower income families, he said. “But I will emphasise that the economy is more resilient. Yes unemployment has gone up a bit, but it is still at historically low levels. We haven’t experienced a recession and we’re not forecasting one.”

He added that the Bank’s use of the word “restrictive” to describe the path for interest rates applies in that context.

Bank may need to raise interest rates further, says Andrew Bailey

14:44 , Andy Gregory

Bank of England Governor Andrew Bailey said the British central bank might have to increase borrowing costs further after it took its benchmark interest rate to a 15-year high of 5.25 per cent on Thursday.

“We now need to make sure that inflation gets back to the 2 per cent target and stays there,” Mr Bailey said in a video clip published by the Bank. “Depending on what the evidence on the economy indicates, we might need to raise interest rates again but that’s not certain.”

Watch: Protesters gather outside Bank of England

14:31 , Andy Gregory

Protesters demonstrated outside the Bank of England on Thursday, 3 August, as interest rates rose for the 14th time in a row, reports Holly Patrick.

Campaigners from Positive Money staged the action to demand the government introduce a windfall tax on bank profits.

The Bank warned of “crystallising” risks which were pushing inflation upwards as it announced an increase in its base rate to 5.25 per cent from 5 per cent.

High street retailer Wilko set for administration with 12,000 jobs at risk

14:15 , Andy Gregory

Wilko has said it plans to appoint administrators, putting about 12,000 jobs at the high street retailer at risk.

The boss of the homeware and hardware chain said it is expected to enter insolvency after failing to secure a takeover to help the business with “mounting cash pressures”.

Earlier this year the company hired advisers from PwC in a bid to find to a buyer in order to secure fresh funding to keep the firm trading. Last year, the retailer agreed a deal to borrow £40m from restructuring specialist Hilco after posting significant losses.

It comes a week after official figures showed insolvencies in England and Wales surged to their highest level for 14 years in the second quarter of 2023 as firms were hit by tighter consumer budgets and rising borrowing costs.

Wilko: High street retailer set for administration with 12,000 jobs at risk

Savers benefited more from June rise than past increases, says Bailey

14:02 , Andy Gregory

The Governor of the Bank of England said there was evidence to suggest that savers benefited much quicker from the 0.5 percentage point increase in June than they had from past interest rate rises.

“The latest numbers we have in June suggest that the pass-through of our June interest rate rise of 50 basis points has been pretty full actually,” Andrew Bailey said.

“So that’s a change because it certainly was not full as has been well covered. That was not the case previously.”

Bank of England forecast is bad news for Sunak, think-tank says

13:33 , Archie Mitchell

The backdrop for the next election will be “falling GDP, higher unemployment and big increases in mortgage repayments,” the Resolution Foundation has said, after the Bank of England hiked interest rates for the 14th time.

The think-tank said the Bank’s gloomy outlook was “particularly bad news for Rishi Sunak”.

Research director James Smith said: “The Bank’s decision to raise interest rates for a fourteenth meeting in a row – continuing the largest tightening cycle in more than 30 years – was expected. But this will provide little comfort for mortgagors facing an increase of around £3,000 in repayments next year.

“While there is good news from the Bank of England that the real-pay squeeze will end sooner than expected, the price for taming inflationary pressures from Britain’s tight labour market is an increase in unemployment of around 350,000.”

Watch: Andrew Bailey says he expects food price inflation to come down

13:11 , Andy Gregory

Bank of England rate hikes ‘having an impact’, says Bailey

12:54 , Andy Gregory

The Bank of England’s interest rate hikes are “having an impact”, governor Andrew Bailey has insisted.

“While pay growth has come in stronger than expected, other data news has been more mixed in terms of its implications for the persistence of inflationary pressures and thus the outlook for inflation over the medium term,” the Bank’s governor said.

“That is why the MPC has voted to increase Bank Rate by 0.25 percentage points today. Given the significant increase in Bank Rate since the start of this tightening cycle, the stance of monetary policy is restrictive. The evidence is now clear that it is having an impact.

“To return inflation to target, policy needs to continue to be restrictive. Today we have taken a decision consistent with that, which will help to return inflation to target.”

BoE is ‘overdoing it’ and ‘causing excessive harm’, warns IPPR

12:50 , Andy Gregory

The Bank of England is “tightening the screws too much and causing excessive harm”, with interests potentially already more than a percentage point too high, the centre-left IPPR think-tank has warned.

“The UK economy is weakening. The labour market is slowing down, and productivity is falling. Increasingly there is a realisation that the Bank of England is already overdoing it,” said senior economist Carsten Jung.

“By raising interest rates to 5.25 per cent, the Bank is tightening the screws too much and causing excessive harm for households and businesses. Interest rates might well be more than a percentage point too high now.

“Instead of further rate rises, we need a more balanced approach to tackling inflation, using more government support.

“Countries like Spain have kept energy prices lower, temporarily limited rent increases and tackled excessively high profits through taxation. Their inflation rate has recently fallen back to target. The UK should take inspiration from their example.”

Inflation on price of goods to ease this year, says Andrew Bailey

12:42 , Andy Gregory

The governor of the Bank of England has said that he expects inflation on the price of goods will ease in the rest of this year.

“Core goods price inflation continues to be broad-based,” Andrew Bailey said on Thursday. “It is taking time for the fall in energy prices to work through the supply chain, and the prices of imported goods have continued to rise despite a fall in world export prices.

“That is why, in our central projection, we expect core goods price inflation to come down only gradually.

“But let me be clear, we do expect goods price inflation to ease over the rest of the year, and there are indicators that suggest it could happen faster than in our projection.”

The Bank of England’s Monetary Policy Committee has raised rates again (REUTERS)
The Bank of England’s Monetary Policy Committee has raised rates again (REUTERS)

Latest rate rise ‘excruciating’ for firms and mortgage-holders, accountants warn

12:39 , Andy Gregory

The Bank of England’s latest hike will be “excruciating” for under-pressure businesses and mortgage-holders, the Institute of Chartered Accountants in England and Wales has warned.

Suren Thiru, the body’s economics director, said: “This latest rate hike will be particularly excruciating for those people struggling with mounting mortgage bills and firms dealing with a multitude of cost pressures.

“The Bank of England remains too fixated on backward looking data when setting interest rates, which risks wider economic damage given the large time lag between rate rises and their full impact on households and businesses.

“Given that most of the 14 interest rate rises are yet to filter through into the real economy, the Bank risks over-tightening, needlessly adding to the risk of recession. With the Bank of England expecting inflation to fall quickly, the case for further interest rate hikes is diminishing fast.”

Bank of England should have ‘held its horses’, says think-tank

12:37 , Andy Gregory

The New Economics Foundation think-tank said the Bank of England should have “held its horses” before pushing up interest rates again.

“When the Bank raises interest rates, it takes time for those effects to filter through the economy,” said senior economist Lukasz Krebel.

He warned that households with mortgages are “already struggling” after 13 interest rate increases and today’s rise “could damage the economy by discouraging investment”.

Pound drops after Bank of England raises rates

12:26 , Alun John

The pound and British government bond yields dropped slightly after the Bank of England raised interest rates by 25 basis points.

Market expectations prior to the meeting were almost evenly split between a 25 and 50 basis point increase.

The pound traded as much as 0.66 per cent down on the day, hitting a fresh one month low, after the decision. It then pared losses to be at $1.2658, 0.4 per cent lower, largely where it was before the decision.

British government bond yields dipped. The benchmark 10 year gilt yield, which had been higher ahead of the decision, was flat at 4.4 per cent, and the rate-sensitive two year yield was down 8 basis points at 4.91 per cent.

The FTSE250 index of British midcap stocks was last up 0.3 per cent and the FTSE 100 pared loses and was down 0.6 per cent.

Inflation will fall to 3% next year ‘if we stick to the plan’, says Jeremy Hunt

12:19 , Andy Gregory

Jeremy Hunt said Britain could avoid a recession and see inflation dip below 3 per cent in a year’s time “if we stick to the plan”.

But the chancellor acknowledged it would not be easy for households struggling with higher mortgage payments.

Reacting to the Bank of England’s decision, he said: “If we stick to the plan, the Bank forecasts inflation will be below 3 per cent in a year's time without the economy falling into a recession.

“But that doesn't mean it's easy for families facing higher mortgage bills so we will continue to do what we can to help households.'”

 (James Manning/PA)
(James Manning/PA)

Interest rate hike ‘incredibly worrying’ for households, says Labour

12:12 , Andy Gregory

Labour said the increase would be “incredibly worrying for households across Britain already struggling to make ends meet”.

Shadow chancellor Rachel Reeves said the Conservatives were responsible for “crashing the economy”, leaving households with higher mortgages, higher food bills and higher taxes.

She said: “The Tory mortgage bombshell is hitting families hard, with a typical mortgage holder now paying an extra £220 a month when they go to re-mortgage.”

 (James Manning/PA)
(James Manning/PA)

Just one Bank of England committee member votes to keep rates level

12:11 , Andy Gregory

Six members of the Bank of England’s nine-strong Monetary Policy Committee (MPC) opted to increase the base rate by 0.25 percentage points.

But two others, Jonathan Haskel and Catherine Mann, voted for a bigger half-point increase, while just one member, Swati Dhingra, preferred to keep the rate at 5 per cent.

The MPC said that some of the risks from more persistent inflation, notably wage growth, had “begun to crystallise”, prompting it to push borrowing costs higher.

The policymakers also indicated that interest rates would need to stay higher for longer in order to bring inflation back down to its 2 per cent target.

 (Yui Mok/PA)
(Yui Mok/PA)

Rishi Sunak to meet inflation target under new Bank of England forecasts

12:08 , Andy Gregory

UK inflation is expected to drop below 5 per cent in the final few months of 2023, allowing Rishi Sunak to meet his target of halving inflation by the end of the year, according to new projections from the Bank of England.

The Bank predicted that Consumer Prices Index (CPI) inflation will fall to 4.9 per cent in the final quarter and remain above 2 per cent until mid-2025.

The recent easing of price rises has been driven largely by a fall in international energy prices, which are set to reduce the average UK household’s energy bill to below £2,000 a year by October.

The Bank added in its report: “Food price inflation, which has a particularly large impact on the living costs of lower-income families due to it making up a larger share of these families’ budgets, remains extremely high.”

But it expects annual food inflation to fall to around 10 per ent by the end of the year as lower input prices make their way down the supply chain.

Interest rate hike is ‘wrong decision’ once again, says Unite

12:07 , Andy Gregory

Trade union Unite has slammed the interest rate hike as the “wrong decision once more”, reports our political correspondent Archie Mitchell.

General secretary Sharon Graham said inflation is high not because of pay increases but “rampant profiteering” and “greedflation”.

She said: “There is no doubt – workers and their families are continuing to pay the price in this cost-of-living crisis.

“The economy is not working for everyday people and we need to make different choices. Until profiteering is tackled there can be no respite from continuing inflation.”

Bank of England must ‘make absolutely sure’ inflation returns to target, says Andrew Bailey

12:04 , Andy Gregory

Commenting on the decision to hike interest rates by a further quarter-point to 5.25 per cent, Andrew Bailey, Governor of the Bank of England said: “Inflation is falling and that’s good news.

“We know that inflation hits the least well off hardest and we need to make absolutely sure that it falls all the way back to the 2 per cent target. That’s why we’ve raised rates to 5.25 per cent today.”

Bank of England pushes rates to new 15-year high of 5.25 per cent

12:02 , Andy Gregory

The Bank of England has hiked interest rates for a 14th consecutive time, further raising the cost of borrowing in its bid to tame stubborn inflation.

The central bank’s Monetary Policy Committee increased its base rate by a further 0.25 points to 5.25 per cent on Thursday, the highest level since February 2008.

It follows a shock rise of 0.5 per cent in June, which has piled pressure on mortgage holders and the housing market.

Economists, however, are eyeing an end to the current cycle of rate increases, after the latest inflation figures suggested that the price rises eating into household budgets were falling faster than expected.

You can refresh our breaking story below for updates:

Bank of England hikes interest rates again despite inflation slowdown

UK economy set to ‘flatline at best’ after sluggish service sector growth

11:33 , Andy Gregory

The UK’s economy is set to “flatline at best” after the dominant services sector suffered its most sluggish growth for six months in July, experts warned.

As firms were rocked by the impact of the rising cost of living and spiralling intrerest, the widely-watched S&P Global/CIPS UK services PMI survey showed a reading of 51.5 last month, down from 53.7 in June.

A reading above 50 indicates growth in the sector, which dominates the British economy and covers retail, hospitality and business and finance. But the sharp dip was the third consecutive slowdown in growth, pointing to potential stagnation in the economy.

It came just days after a similar survey showed bosses in manufacturing sector were the gloomiest they have been since the height of the first Covid lockdown.

Our political correspondent Archie Mitchell has the full report:

UK economy set to ‘flatline at best’ after sluggish service sector growth

‘Still work to be done’ for Bank of England, says analyst

10:51 , Andy Gregory

There is “still work to be done” for the Bank of England, an analyst has said, ahead of today’s expected interest rate rise.

William Marsters, financial markets expert at Saxo, said: “The Bank of England is expected to announce yet another interest rate rise today as the UK continues to grapple with high levels of inflation. From the current level of 5 per cent, most are expecting a lift of 0.25 per cent, but another 0.5 per cent increase can’t be ruled out.

“With inflation decelerating in Europe and the US, it is speculated that those Central Banks may be approaching the end of their hiking cycle signalling light at the end of the tunnel. The UK inflation figures also fell last month, but Britons continue to experience the highest inflation across the G7 economies. So, some argue that this macroeconomic backdrop calls for greater tightening.

“Three large UK banks announced they would cut mortgage rates this week on the back of last month’s reduced inflation numbers. This gives homeowners an element of hope after some data showed this week has seen the fastest drop in house prices for 14 years.”

“There is still work to be done from the BoE, and the government maintains its promise to cut inflation in half this year. The policy move today, and any commentary will be closely watched by investors looking for clues on future policy, and also by consumers who are struggling with the cost of living crisis.”

‘Some pause’ on property purchases, says housebuilding boss

10:02 , Andy Gregory

A housebuilding company has said there has been “some pause” on prospective homeowners buying properties amid an increase in mortgage rates.

Peter Truscott, the chief executive of Crest Nicholson, was asked on Radio 4’s Today programme if demand for housing is falling as interest rates rise.

He said: “Demand still remains very strong in terms of clicks onto the website, people that are interested in buying homes, but not surprisingly, there has been some pause in terms of people actually coming in and reserving homes.

“I think a lot of people are standing on the sidelines. The market is broadly as we expected it to be following the the dislocation at the back end of last year and it’s tending to be volumes which are taking the strain rather than price.

“There is a little bit of gentle downward pressure on price, but it’s really volumes that are taking the strain.”

Money markets could reduce rates if Bank of England signals that inflation stabilising, analyst says

09:29 , Andy Gregory

Money markets could even reduce their rates if the Bank of England signals that core inflation is stabilising and interest rates are close to their peak, an analyst has suggested.

Speaking to BBC Radio 4’s Today programme, Jane Foley, head of FX strategy at Rabobank, said the costs of fixed-rate mortgage deals “are more tied to money market rates which factor in expectations of where rates will be in two years or one year etc”.

If the Bank indicates later today that core inflation is stabilising, Ms Foley said, then “money market rates may not move, they may even come down a bit” – reducing the cost of fixed-rate mortgage deals.

Abandon interest rate rises, think-tank urges Bank of England

09:01 , Andy Gregory

A further interest rate rise would risk damaging the UK’s fragile economy and is unnecessary to tackle inflation, a shadow committee of economists organised by the right-wing Institute of Economic Affairs think-tank has said.

Having met once a month since 1997 to shadow the Bank of England’s Monetary Policy Committee, the group voted eight to one to keep the base rate at 5 per cent, with one member voting for a half-point increase to 5.5 per cent to prevent inflation from “becoming embedded in the economy”.

Trevor Williams, the group’s chair and former chief economist at Lloyds Bank, said: “It will take some time for previous rate rises and falling global commodity prices to feed into lower inflation. But, in the meantime, further rate rises by the Bank of England are unnecessary and could do some economic damage without lowering inflation any faster.

“The UK economy is on the precipice of a sharper slowdown. There has already been a contraction in the money supply, with less liquidly available for loans, lower house price inflation, and slowing economic activity, as shown in the sharp fall in the Purchasing Managers’ Index (PMI) for manufacturing.”

John Rentoul | Rishi Sunak’s optimism is beginning to look like delusion

08:33 , Andy Gregory

In his latest column, our chief political commentator John Rentoul writes:

The prime minister had obviously learnt from his tetchy clash with a BBC radio presenter on Monday, and came to his longer interrogation by members of the public on Nick Ferrari’s show on LBC determined to be polite, cheerful and thoroughly reasonable.

But Rishi Sunak managed to keep the financial jargon to a minimum (talking of when Jack’s mortgage “comes up for repricing”) and turned his replies effortlessly to the fundamental argument that “the best way to help is to bring inflation down”.

The prime minister can’t talk the economy down, obviously. But given the Bank of England is almost certain to raise interest rates yet again, the battle against inflation is not one that Sunak is currently winning. To be as optimistic as he is risks sounding delusional and voters won’t thank him for not levelling with them.

Sunak’s optimism is more like delusion – and won’t trick voters

Banks under pressure to pass interest rate rises onto savers

08:04 , Andy Gregory

While interest rate increases spell further pain for borrowers, banks are under more pressure to also pass rate rises onto savers.

Myron Jobson, senior personal finance analyst for Interactive Investor, said: “There might be a bit more urgency among banks and building societies to pass on the base rate rise to their savings products this time around as the Financial Conduct Authority (FCA) has recently gained new powers to take robust actions against those offering unjustifiably low rates.”

The FCA this week shared a 14-point action plan to make sure that savers are being offered better deals.

How will the regulator’s cash savings action plan help savers?

Both US and ECB hike interest rates to two-decade highs

07:30 , Namita Singh

Thursday’s announcement comes as both the European Central Bank and the US’s Federal Reserve hiked up respective interest rates to two-decade highs this week.

Both central banks opted for a 0.25 percentage point increase amid in the global effort to control rampant inflation.

Europe’s markets climb as ECB signals end to rate rises but FTSE underperforms

Economists eye an end to cycle of interest rate rises

07:00 , Namita Singh

Pressure on the Bank of England could be cooling as policymakers look set to raise interest rates further, but with an end to the prolonged hiking cycle in sight.

Experts think the latest UK inflation data has taken some of the pressure off the central bank, because it showed a bigger-than-expected slowdown in price rises. It means that rates – which are a tool used by the Bank to bring inflation down to its 2 per cent target – may not need to climb as high as feared.

The level could peak at about 5.75 per cent this year, according to economists from the likes of ING Economics and Deutsche Bank.

“Beyond this month (August), we’re sticking with our prediction of another increase in rates in September, at which point the present rate rise cycle should come to an end,” predicted Andrew Goodwin, chief UK economist for Oxford Economics.

Rishi Sunak believes ‘light at end of the tunnel’ on inflation

06:30 , Namita Singh

Rishi Sunak said that although inflation is not falling as fast as he would like, he believes people can “see light at the end of the tunnel”.

Consumer Prices Index inflation was at 7.9 per cent in June – down from 8.7 in May and the lowest rate since March 2022 – but the PM needs it to fall to around 5 per cent or below by the end of the year in order to meet one of his government’s key pledges.

Mr Sunak told LBC’s Nick Ferrari: “I know families are struggling with the cost of living and that’s why I set it out as my first priority to halve inflation, and we’re making progress.

“Is that as fast as I’d like? No. Is it as fast as anyone would like? No. But the numbers most recently that we had show that we’re heading in the right direction, inflation is coming down, and I think people can see light at the end of the tunnel.”

Rishi Sunak believes ‘light at end of the tunnel’ on inflation

Investec predicts rate rise of 0.5%

05:30 , Namita Singh

Investec Economics has predicted the Bank of England will opt for a larger-than-expected 0.5 percentage point increase on Thursday.

But the firm expects it could be followed by a final quarter-point hike the following month before the cycle of interest rate rises comes to an end.

Laith Khalaf, head of investment analysis at AJ Bell, said: “The market is now expecting interest rates to top out at 5.75 per cent or 6 per cent by the end of the year, so has already pared back its bets from the height of inflationary panic when rates north of 6 per cent were envisaged.

“The Bank is still walking a tightrope though, as it tries to tame inflation without breaking the housing market.”

Bank of England to issue new economic forecasts

04:30 , Namita Singh

In addition to its interest rate announcement, the Bank of England’s Monetary Policy Committee will draw up fresh economic forecasts on Thursday – which economists will also be closely watching.

 (Aaron Chown/PA)
(Aaron Chown/PA)

Bank announcement means mortgage-holders ‘not out of the woods'

04:00 , Namita Singh

The Bank of England’s looming announcement likely means those with mortgages are “not out of the woods” yet, a broker has said, after data showed house prices fell in July by their largest margin in 14 years.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With another 25 basis points interest rate rise expected from the Bank of England later this week, we are not out of the woods just yet when it comes to rising mortgage costs.

“However, a few lenders, including HSBC, Barclays and Nationwide, have reduced their fixed-rate mortgage pricing on the back of better-than-expected inflation news. This has led to a calming of swap rates, which underpin the pricing of fixed-rate mortgages, after weeks of considerable volatility.”

The price of a typical home is now 4.5 per cent below the August 2022 peak, Nationwide said this week.

Noting that “investors’ views about the likely path of UK interest rates have been volatile in recent months”, Robert Gardner, Nationwide’s chief economist, said: “There has been a slight tempering of expectations in recent weeks but longer-term interest rates, which underpin mortgage pricing, remain elevated.

“As a result, housing affordability remains stretched for those looking to buy a home with a mortgage.”

UK house prices fall at fastest annual rate in 14 years

Bank of England expected to announce 14th consecutive rates rise

03:30 , Namita Singh

Hi, and thanks for joining us on the liveblog, as the Bank of England’s latest announcement on interest rates looms.

The central bank is widely expected to raise its base rate by a further 0.25 per cent on Thursday morning – in what would mark the 14th consecutive rise to the cost of borrowing.

The rise to 5.25 per cent would mark the highest level interest rates have hit since February 2008.

UK interest rates to rise further but end of hiking cycle in sight