HOMEOWNERS have been warned to brace for high interest rates into 2025 as the Bank of England grapples to contain inflation.
It raised them by 0.25 percentage points to a 15-year high of 5.25 per cent yesterday — the 14th hike in a row.
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And governor Andrew Bailey said rates will remain high for as long as it takes to bring inflation down to its two per cent target.
Experts believe this is a signal they could stay above five per cent into the year after next – clobbering mortgage holders for longer.
In a sliver of good news for the Government, the Bank’s latest inflation forecast has the PM hitting his vow to halve the rate of price rises by the end of the year.
It thinks inflation will be at 4.9 per cent by then — down from the 11.1 per cent peak last October.
But Chancellor Jeremy Hunt still warned of more painful times to come to hit the target.
He said: “It’s encouraging that the Bank of England thinks that we will not just meet that pledge, but this time next year inflation will be about 2.8 per cent.
“But we should recognise that there is a lot of pain for families, for businesses. The process of getting there is very tough.”
He added: “The plan is working. But what we have to do as a government is to make sure we stick to that plan and we that don’t veer around like a shopping trolley.”
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Inflation is at 7.9 per cent after easing more than expected in June.
But economic commentators of all stripes were united in warning the Bank is pushing rates too high and risking a major downturn.
Left-leaning think tank the IPPR accused the Bank of “overdoing it”.
Meanwhile, the free-market IEA said it was at risk of “only realising its mistake when it is too late”.
The rate hike is further bad news for mortgage borrowers.
Those on tracker deals face nearly £24 a month being added to their payments on average, according to trade association UK Finance.
Since rates began to rise, average monthly payments have risen by £488.50 for tracker deals.
