Bank of England increases interest rate to 5.25% as homeowners face higher mortgage costs

The Bank of England was widely expected to increase its interest rates today, delivering a further 0.25% rise to 5.25%.

With two-year fixed mortgages across the UK raising the costs for more than 1 million homeowners, the latest interest hike will maintain financial pressure on those that can least afford it.

It was just a few weeks ago that the average two-year fixed mortgage deal in Scotland peaked over 6%, and it looks like mortgages will remain expensive well into 2024.

Edinburgh is set to be the most affected city in Scotland as people seeking to remortgage could be facing additional cost increases close to £300 extra a month,.

While the mortgage market remains difficult for homeowners, there could be light at the end of the tunnel as other inflation indicators suggest we may be over the worst of price rises.

Following similar movements by the Fed in the US and the European Central Bank, the UK’s latest increased interest rate is following largely in step with other major economies. The question remains, how long will interest rates remain this high? For people with mortgages expiring in the coming months ahead, renewing could prove considerably more expensive than just a year ago.

Are you being affected by the interest rate hikes in the UK?