MORTGAGE rates went up again yesterday and pension funds took a hit on another day of market turbulence.
The Bank of England was forced to step in for the third time in a week to try to calm the markets and prevent a “fire sale” of Government debt.
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Bosses warned there was a risk to the country’s financial stability caused by the chaos in the bond market.
Amid the alarm, mortgage rates for a fixed two year deal hit 6.43 per cent — up from 2.25 per cent last year.
It came amid a mixed analysis on the state of the economy by IMF experts.
Hugely critical of Chancellor Kwasi Kwarteng’s mini-budget, the IMF conceded Britain will grow fastest of all other G7 economies this year at 3.6 per cent.
But it says growth will fall to 0.3 per cent next year, and inflation will last longer than other advanced economies, remaining high at 6.3 per cent at the end of next year.
The IMF’s chief economist Pierre-Olivier Gourinchas likened the Bank and Treasury to “a car with two people in the front and each of them is trying to steer it in a different direction.”
Yesterday’s intervention by the Bank was its second in two days.
Experts said instability, caused by traders selling off Government debt, was hitting pension funds.
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The funds have fallen in value by around 12 per cent in the past year, according to Nathan Long, senior analyst at Hargreaves Lansdown.
And Stephen Webb at LCP said that based on official figures showing that £233 billion in defined contribution schemes, at least £30 billion will have been wiped off.
He said: “People coming up to retirement will have to work one or two years longer because there just isn’t enough in their pots to retire on.”
