INTEREST rates were yesterday put up to their highest level since 2009 by the Bank of England, which warned more rises are on the cards.
The increase from 0.5 per cent to 0.75 per cent is designed to rein in inflation after the value of the pound dropped and energy prices went up.
Bank governor Mark Carney (pictured) said rates will continue to rise gradually — and analysts expect them to reach 1.1 per cent by 2021.
A mortgage holder owing £250,000 can expect to pay an extra £31 a month as a result of yesterday’s increase if they are on a deal tied to the base rate.
And although savers should benefit eventually, rates for roughly half the savings accounts on the market remained unchanged in the wake of the last increase in November.
StepChange Debt Charity warned the hardest hit would be households that rely on credit to make ends meet.
Chief executive Phil Andrew said: ‘While a rise in interest rates might be right for the wider economy, from a consumer debt perspective many households are walking a precarious budget tightrope.
‘Their incomes don’t stretch to cover the basics each month. Policymakers mustn’t lose sight of what a rate rise means for people on a tight budget.’
Mr Carney stressed the aim of adjusting rates is to ensure stability, saying: ‘Rates can be expected to rise gradually. Policy needs to walk, not run, to stand still.’
Economists predict the next rise will be delayed for at least nine months with Brexit day in March likely to affect consumer confidence. And business groups said the Bank should have resisted yesterday’s rise to avoid dampening spending at a time of political uncertainty.
The Institute of Directors accused Mr Carney of ‘jumping the gun’, while the British Chamber of Commerce described the increase as ‘ill-judged’.
Most banks and building societies said yesterday they were still mulling over whether to pass on the rise to savers.
Alistair Wilson, of insurance and savings company Zurich, said: ‘It could take months before savers actually see the impact of this hike.
‘November’s 0.25 per cent increase only resulted in an average 0.07 per cent rise on easy access accounts.’
■ A PROPERTY tycoon ramped up rents on hundreds of homes within an hour of the Bank of England’s interest rate rise. Fergus Wilson, who owns houses and flats in Ashford and Maidstone, Kent, slapped a £50 increase on tenants ‘immediately’ — a five per cent rise on rent of £1,000. The 69-year-old multi-millionaire — one of the UK’s largest buy-to-let investors — has attracted notoriety for evicting mothers with very young babies.