INTEREST rates are at their highest since 1995 after the Bank of England hiked them from 1.25 per cent to 1.75 per cent
The 1.75 per cent rise is now expected to increase monthly repayments for millions of homeowners on variable rates mortgage deals and other forms of borrowing.
Bank chiefs have warned warned the UK will fall into recession this year with the economy expected to shrink until the end of next year, the longest downturn since the 2008 financial crisis.
It blamed the slump largely on rising gas prices following Russia’s invasion of Ukraine, warning a typical energy bill will hit £3,500 in October.
This would mean an average household paying almost £300 a month on energy bills.
The Bank says this sharp rise in energy bills, which are set to be three times more than a year ago, will drive inflation – the rate at which prices rise – to 13 per cent, its highest level for 42 years.
Now rates have gone up to 1.75 per cent, homeowners on a typical tracker mortgage will have to pay about £52 more a month.
Those on standard variable rate mortgages will see a £59 increase.
It means tracker mortgage holders could be paying about £167 more a month compared to pre-December 2021, with variable mortgage holders paying up to £132 more.