The Bank of England unexpectedly pushed up interest rates to 5%, the highest rate in almost 15 years, as policymakers and the UK Government come under mounting pressure to control the cost of living crisis. The move is set to deepen the mortgage crisis as borrowing costs are hiked up for the 13th time in a row.
The 0.5 percentage point increase was the sharpest increase since February, surprising economists who had been expecting a smaller hike of 0.25 percentage points. It follows a higher-than-expected inflation reading in May as continued price rises forced policymakers into action in a bid to bring inflation down to the 2% target.
But what does this mean for homeowners in real-terms? Under-pressure mortgage borrowers have been offered some potential relief as Chancellor Jeremy Hunt and major banks agreed measures on Friday to help ease the pain of rising rates.
