Mortgage payers warned due to13th interest rate rise in a row

Mortgage payers face a nightmare with a 13th consecutive interest rate hike next week – likely to be followed by three more, according to financial markets.

Analysts expect the benchmark to climb by 0.25 percent to 4.75 percent on Thursday in the battle against high inflation. And even a 0.5 percent jump is “not out of the question” when the Bank of England meets.

The move would hit more than a million people whose fixed-rate mortgage deals will expire soon, plus those already on variable rates.

It means the average borrower still on a fixed loan faces a £200 increase in monthly repayments if their rate rises by three percentage points.

PM Rishi Sunak is under pressure to fulfil his vow to halve inflation to 5.4 percent by the end of the year. It stands at 8.7 percent, due to stubbornly steep food costs.

Laith Khalaf, of investment firm AJ Bell, said the Bank was “caught between a rock and a hard place”, choosing between pushing more borrowers towards the brink and “letting inflation run riot”. Mortgage market volatility has made some major lenders temporarily pause applications and increase their rates.

Myron Jobson, of Interactive Investor, said more misery looms for people renewing deals in the second half of this year – their expired loans were set at interest rates below two percent.

And the average interest rate on a new two-year fixed mortgage is likely to breach six percent in days.

They typically hit 5.98 percent yesterday. Brokers des-cribed a vicious circle of lenders hiking rates at short notice, then borrowers grabbing deals leading to swamped firms pulling deals or raising rates.

Markets now predict a total of four rate hikes, leading to a 5.75 percent peak. Mr Khalaf said “A few hawkish comments from the Bank, or ugly inflation data, could easily tip those expectations up to six percent.”

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