Two weeks ago the base rate of interest in the UK was raised to five percent - at the time the highest interest rate the country has seen in a 15 year period - last seen in March 2008. Today the Bank convened again a fortnight later, and raised the rate to 5.25 percent.
The 0.25 percent climb was expected, with some analysts looking at data predicting a possible subsequent 0.5 percent hike. Whilst the reality has provided an outcome on the lower side of the forecasts, mortgage holders will still be reeling from the effects.
The hardest hit age groups will be in the 35 to 44 age bracket, who hold a debt pile around £100,000 - which will now see the instant rate hit (unless fixed). People age 70 and over will benefit the most as this age group has the least debt and the most held in savings.
Those with mortgages will see an average 15 percent increase in their payments, contributing further to the cost of living crisis.
Today's news comes after analysts predicted that rates will continue to rise to levels of up to 5.75 percent by the close of the year - and chances of any cuts to the base rate an low until well into 2024. Rates were previous predicted to fall to 4 percent from summer '24 and creep lower to 3.7 percent a year later, but markets are not so positive now and think rates will actually climb to near 6 percent next year and only fall down to 5 percent in 2025.
Fixed mortgages are currently priced in for this rate rise - so the average 5 year fixed deal still stands at around 6.4 percent (2 year at 6.85 percent) - however, in a couple of weeks new inflation data will impact on SWAP rates and that will influence mortgage lenders pricing models.
Savers on fixed term products have an average rate of 5.21 percent - with instant access savings accounts at a lower 2.8 percent.