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Daily Record
Andrew Quinn

Scots face mortgage payment hikes as interest rates rise again

Scots are facing mortgage payment hikes after the Bank of England raised interest rates on Thursday.

The Bank's Monetary Policy Committee (MPC) decided to hike the base rate from 3.5 per cent to 4 per cent to help bring down inflation.

This is the tenth time in a row that the Bank of England has hiked interest rates. It is also the highest that they have been since 2008.

It comes only days after the IMF announced that the UK was the only major economy predicted to shrink in 2023.

Those on standard rate variable mortgages and tracker mortgages are likely to see their monthly payments go up.

Monthly repayments will stay the same for those on fixed-rate mortgages, but will probably increase after re-mortgaging.

Landlords may also increase rent if their mortgage payments have risen.

The Scottish Greens have said that the interest rate increase will be "a devastating blow" to families across Scotland.

The party's economy spokesperson Maggie Chapman MSP said: “This will be yet another devastating blow to households and families who have already been hammered by years of Tory ineptitude and failures.

“Despite the cost crisis and pain that many are already feeling, this is the 10th time in a row that rates have increased. It is not just an abstract number or an algorithm. People’s wellbeing is at stake, and this rise will force many households to cut back on essentials while making it even harder for others to get on the housing ladder.

“This isn’t happening in isolation. By almost every economic indicator this Tory government is failing and failing badly."

UK Liberal Democrat Leader Ed Davey called the announcement "a hammer blow"

Davey said: “This is a hammer blow to hardworking families across the country. Today’s decision to hike mortgage rates has added fuel to the fire of this cost of living crisis.

“The blame lies squarely with the Conservative Government whose botched budget last year sent mortgage rates spiralling. Their complete failure to get inflation down has led to homeowners paying the price.

“Since Rishi Sunak became Prime Minister, the typical homeowner is paying £822 more in mortgage interest payments. He has done nothing to help families with this. It is time he stepped in and introduced an emergency mortgage protection fund to stop people losing their homes.”

The Bank of England also said that the UK is still headed for a recession but that it could be shallower and shorter than previously expected.

This is because wholesale energy prices have fallen significantly since November's forecast and inflation has begun to fall from its peak last year.

The UK will suffer a recession of five consecutive quarters, starting in the first three months of 2023.

The number of job vacancies is set to decline and redundancies will remain low. The Bank suggested this was because companies are less inclined to let staff go as quickly as they did in previous recessions.

The rate of unemployment is expected to peak at 5.25 per cent, lower than the 6.5 per cent that was previously forecast.

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