For the third time in four months interest rates have increased as the Bank of England tries to calm the rise in the cost of living.
The Bank of England has increased interest rates for the third time this year to 0.75% to counter higher living cost prices.
As the UK economy recovers from COVID-19 and businesses continue to settle into the ‘new normal’, living costs have continued to skyrocket.
Source: Bank Of England
The rise from 0.5% to 0.75% means rates are now at their highest level since March 2020, when Covid lockdowns began.
Energy bills and food costs are increasing and with supply chain issues throughout the world, prices could increase further.
The Bank of England has also warned inflation, the rate at which prices rise, may reach 8% and possibly higher, in the coming months.
So, what does this mean for consumers?
About two million households will see an immediate increase in their mortgage payments because of the rise in rates, according to UK Finance.
The increase will add about £26 a month to the cost of a typical tracker mortgage, and £16 to the cost of a typical standard variable rate mortgage.
It also warned that inflation could hit double-digits later in the year if energy prices push up the energy price cap.