Mortgage holders today faced more pain after the Bank of England unexpectedly pushed up interest rates to 5 per cent, the highest level in almost 15 years.
The move could deepen the crisis as borrowing costs are hiked up for the 13th time in a row – adding an estimated £47.43 to the average monthly tracker payment.
The 0.5 percentage point rise was the sharpest increase since February, surprising economists who had been expecting a smaller hike of 0.25 percentage points.
Ahead of the Bank’s decision, the average two-year fixed mortgage rate was at 6.19 per cent today – up from 5.34 per cent just one month ago. The five-year rate was 5.82 per cent today, up from 5.01 per cent a month ago, according to Moneyfacts.
It comes after the inflation rate was revealed yesterday to have stuck at 8.7 per cent in May – the same as in April, despite experts forecasting a fall to 8.4 per cent.
Calls continue to grow for the Government to do more to help mortgage borrowers who are set for a big jump in their monthly repayments. But Prime Minister Rishi Sunak has so far dismissed suggestions that ministers could intervene.
Here, MailOnline speaks to mortgage holders about their financial situations:
I switched to a tracker to overpay but have already seen a £240 rise
Katie, 28, a teacher who lives in East Anglia
A teacher revealed today she has already seen an increase of £240 a month on her tracker mortgage before today’s Bank of England rate decision.
Katie, 28, who lives in East Anglia with her partner, said she shifted to the product two years ago because it meant the couple could overpay more.
But because the tracker mortgage rises every time the base rate does, the couple have been hit by a huge rise in repayments.
She told MailOnline: ‘We are on a tracker we went on it so we could over repay because obviously on other mortgages you are very limited in terms of how much you can over repay ‘
The pair switched in November 2021 when the interest rate was 1.84 per cent.
They are now paying 6.24 per cent and their monthly mortgages costs have gone from £500 and to £740.
The couple looked at fixing last year but decided not to as the base rate was already at 3 per cent and fixed deals were even higher.
Katie and her partner, who is a project engineer, took out a £90,000 mortgage together in November 2021 and since then they have paid it down to around £6,000.
But Katie said: ‘I do still find it worrying, every time it goes up even though we don’t have much left to pay off.
‘It’s not just us affected, so many people are affected in more severe ways and I find it frustrating that we worked hard to pay it off early but we keep getting stung by these rate rises and it has made me want to pay it off quicker as it keeps going up.’
Reacting to today’s base rate rise, Katie told MailOnline: ‘It just feels like it is literally never going to end. I am out for a walk with my colleagues and we were talking about it about how it is constantly going up at the moment.
‘If I hadn’t paid down my mortgage I would be massively panicking by now. Its 5 per cent, so that’s another mile stone.’
She continued: ‘We didn’t really have a plan [when we decided to go on to a tracker] it was just a case of paying it off as soon as we could and making the overpayments when we could from our earnings.
‘I had some money in savings so I have put that in our mortgage as well – so now I don’t have any savings as I have concentrated on putting it into the mortgage.’
Mortgage interest will ‘more than double’ when fixed rate expires
Author John Lamerton, of Plymouth, Devon
A business author has revealed the interest on his mortgage will ‘more than double’ when his fixed-rate deal expires.
John Lamerton, who owns Big Idea Ventures and wrote the 2017 book ‘Big Ideas… For Small Businesses’, told MailOnline: ‘The Bank of England seems determined to push us into recession.
‘Small business owners have already had to survive Covid lockdowns, inflation-busting outgoings in the form of suppliers and staff, and a cost-of-living crisis causing customers to drastically reduce spending.
‘This latest rise could well be the final nail in the coffin for many small business owners.’
The former civil servant from Plymouth, Devon, added: ‘Will the last small business in the UK please turn the light off?’
Rate rises are becoming a ‘significant hurdle’ for homeowners
Rob Dawes is director of Derby-based Briight
A director of a visual marketing agency said the impact of rate rises has become a ‘significant hurdle’ for his small team of staff.
Rob Dawes, who works for Derby-based company Briight, told MailOnline: ‘We find ourselves unexpectedly caught in the grips of the surging mortgage rates that are reverberating through the business landscape.
‘The impact of these rates has become a significant hurdle for our team members. Over the past six months, nearly half of our people have been confronted with the task of remortgaging their homes, obviously at new, higher rates.’
He added that recent internal performance reviews have shown the escalating costs of mortgages and bills emerging as a ‘recurring concern’.
Mr Dawes continued: ‘Whilst we have been able to support our team members, the economic uncertainty means that although demand for our services remains high, our clients are being squeezed on their own budgets, so negotiations are tougher than ever.
‘From our conversations, the predicament faced by Briight is not unique, as businesses across various sectors are grappling with the far-reaching implications of these soaring mortgage rates.’
Small business owner faces repayments rise from £900 to £1,800
Stuart Crispe, whose small business is based in the City of London
A small business owner has pointed out the irony of starting his company to assist people with their mortgage and financial needs – but ‘now I am in need of the help’.
Stuart Crispe told MailOnline that because he has recently become self-employed, he cannot verify his income and therefore his only option is to move to a standard variable rate mortgage.
The founder of Sunny Avenue, a directory service for financial service professionals in the City of London, added that this would increase his mortgage repayments from £900 to £1,800.
He said: ‘It’s making me re-think whether I can actually afford this venture after all. There has been absolutely no support from Government, my company has paid a fortune in VAT to ultimately now be in this position with still no support.
‘I have no idea what to do but just keep grafting.’
Couple from Bradford say £800 bill hike will hit their wedding plans
Amy Adams, 28, and her fiance Ashley Heatherington, 29, who live in Bradford
Two years ago, when Amy Adams, 28, and her fiance Ashley Heatherington, 29, purchased their first home, they felt optimistic that interest rates would continue to fall.
The couple, from Bradford, West Yorkshire, bought their three-bedroom new build with the assistance of a 20 per cent Government Help To Buy loan in December 2021.
They currently pay £700 a month for their £160,000 mortgage with Precise, which offers a rate of 4.89 per cent.
These payments are set to more than double in December when their current mortgage deal ends.
Miss Adams said: ‘Our mortgage adviser says that when we remortgage our payments may increase by £800 a month.
‘It’s a very stressful situation. We both work in the NHS as data analysts, and we’re hoping for a pay rise this month.
‘But even if we do get a rise, it won’t cover the increase in our mortgage payments.’
Their high level of outgoings means the couple are having to cut costs elsewhere, such as on holidays. They are also scaling back their wedding, planned for next year.
Miss Adams said: ‘My parents are always willing to help, but I don’t want to ask them, as they’re already contributing to our wedding. It’s definitely a worrying time.’
Financial adviser will cut down social expenses after £350 increase
Luke Thompson, of King’s Lynn, Norfolk
An experienced financial adviser has revealed he will have to cut down on social expenses after his mortgage recently increased by over £350 a month.
Luke Thompson, who is based in King’s Lynn, Norfolk, told MailOnline: ‘I am a mortgage adviser and financial adviser and have recently had to take a new fixed rate on my mortgage.’
The director of PAB Wealth Management added that the rise in costs had made him rethink his monthly budget.
He said: ‘My mortgage has increased by over £350 and this is something that is of concern to me as it cuts into my income month to month and will restrict the money I spend on social expenses.
Marketing expert sees total payments rise from £1,200 to £1,300
Craig Webb, of Bicester, Oxfordshire, said he and his wife now have three mortgages
A marketing expert who left his salaried job in January to focus on his own business said he will find a new mortgage deal harder to get.
Craig Webb said he and his wife, who is a nurse, have three mortgages because they have expanded their home over the years to accommodate their three teenagers.
Mr Webb, who is based in Bicester, Oxfordshire, said the mortgages end at different times, but one just renewed taking their total payments from £1,200 to £1,300 a month.
He told MailOnline: ‘I have offset some of this cost as my commute was an hour’s drive each way which I no longer have to fund.
‘I would say that as a family of five, our food bill increases have been more significant than the mortgage so far.’
Mr Webb, who owns Webb Marketing Services which specialises in marketing for the hospitality sector, also said leaving his job earlier this year ‘may seem risky but I feel I am more secure with ten clients than one employer’.
But he added: ‘As I now work for myself a new mortgage will be harder to come by.’
Homeowner might have to move to Australia for a cheaper life
When his current mortgage deal expires in October, Jamie Madden was horrified to learn that his monthly payments could soar by £200 a month.
The 33-year-old health and safety manager, from Devon, had bought his three-bedroom semi-detached town house in Seaton in 2021, and took out a two-year fixed-rate mortgage with Barclays with a repayment of £450 a month.
But when he spoke to a mortgage broker last week, the new father was shocked to be quoted a monthly repayment of £550.
And within just a week, rates have increased so much that he is now facing repayments of £650 a month.
Mr Madden said: ‘It’s very stressful as there is only me and my partner, Marissa, and she can’t work because she’s caring for our baby son, Reuben.
‘It’s difficult at the moment as our fixed-rate energy tariff is set to expire next month, which will add an extra £50 a month to our bills. I don’t even have that left over at the end of the month.’
He added: ‘We’re even considering moving to Australia for a cheaper lifestyle.’
