The Bank of England raised interest rates for the first time in over three years on Thursday, aiming to curb inflation fueled by the Iran war. Experts predict more hikes in the next 18 months as the conflict drives up food, fuel, and energy prices globally. Higher rates increase borrowing costs, making mortgages, credit cards, and personal loans more expensive for millions, even as savings rates improve.
Peter Gill, 48, is among the 1.3 million Britons with variable-rate mortgages. His monthly repayments will rise by about £45 following the latest rate hike. He worries about further increases but believes switching to a fixed-rate deal would be costlier. Gill, who runs a tiling business in Halifax, faces rising costs from higher wages, raw materials, and household bills.
Dawn Fazackerley-King, a Pilates instructor near Ipswich, is set to refix her mortgage after her current 1.4% deal expires. The best available rate is 5.69%, increasing her monthly payments by £200. She and her husband, with a joint income of £70,000, have already cut expenses and cannot take on extra work. The additional cost adds stress to their financial situation.
Ben Thomas, 41, from Shropshire, worries about rising credit card repayments due to the rate hike. He owes £52,000, mostly from credit cards and personal loans used for living expenses. While he has paused interest on most of his debt, he still faces charges on around £2,000 of credit card debt. Simon Trevethick of StepChange debt charity warns of increasing demand for support as borrowing costs rise.