Homeowners to feel the pinch after interest rate rise

Mortgage holders will take a hit after the Bank of England raised interest rates again, although benefits may not be passed on to savers, experts have warned. The interest rate has returned to pre-pandemic level of 0.75%, up from a historic low of 0.1% set in 2020, after three consecutive rate rises by the central bank. The Bank's rate-setters are under pressure to contain inflation, which hit a 30-year high of 5.5% in January. About two million homeowners on variable mortgages face higher monthly payments as a result of the rate rises. Lenders have been slow to reprice mortgages despite the repeated rate rises but no longer have the scope to absorb the increase in their margins, analysts have warned. Andrew Wishart, a senior property economist at the Capital Economics consultancy, said borrowers should expect a sharp rise in mortgage rates over the next year. In February, banks' margins fell to their narrowest since 2007 so it is likely lenders will "rebuild their margins a little as they reprice mortgages to account for the sharp rise in market interest rate expectations in recent months", he said. Sky News BBC News The Daily Telegraph The Times City A.M.