UK interest rate rise – latest: Biggest hike in 14 years ‘to add £600 to some mortgages’

Related video: How is the government going to help businesses with their energy bills?

Some homeowners could see their annual mortgage costs increase by around £600 as a result of the Bank of England’s interest rate rise, a trade association has warned.

UK Finance said mortgage borrowers whose deal directly tracks the base rate will see their payments increase by around £49 per month – or £600 per year – on average.

The figures also showed that a borrower sitting on their lender’s standard variable rate (SVR) will typically see a monthly increase of just under £31, adding up to around £370 per year.

Nearly four-fifths (78 per cent) of residential mortgages outstanding are fixed rates, meaning these borrowers will not see the immediate impact of the Bank of England’s base rate hike on Thursday from 1.75 per cent to 2.25 per cent – the highest level since November 2008.

But, if they have been safely locked into their home loan for a while, they may find they get a bill shock when they do eventually re-mortgage.

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Chancellor’s plans fail to restore nature and cut climate-changing emissions, says FoE

Responding to the chancellor’s “vision for a new era for Britain” that he will set out in tomorrow’s mini-budget, Friends of the Earth’s head of policy, Mike Childs, said: “The chancellor’s mini-budget is yet another lost opportunity to lay out a plan to insulate the UK’s heat-leaking homes, and scale up cheap, clean onshore renewables so we can cut our use of costly gas and reduce energy bills for good.

“While many people will be relieved that their energy bills won’t be soaring as high as once forecast, around six million people will still be in fuel poverty this winter – almost double the number in 2021. “What’s also deeply worrying are plans to weaken environmental safeguards. The chancellor is treating economic growth and environmental protection as mutually exclusive, but they’re not. It’s this tired thinking that is driving the energy, climate and ecological crises we’re facing.

“We really needed this budget to ease the cost of living emergency, restore nature and cut the emissions that cause climate change, but it totally fails on all counts.”

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Tax cuts won’t ‘spur huge revival in economic growth’

Neil Shearing, the chief economist at Capital Economics, has said that the cuts in national insurance and corporation tax, which are expected to come in the budget, will not grow the economy much.

“I think the framing of this has been slightly skewed actually. We’ve come off the back of 15 years of cripplingly low growth,” he told MPs on the Treasury Select Committee.

“What these tax cuts do is take tax rates back to where they were 18 months ago when growth was really low.

“So the idea that it’s suddenly going to spur this huge revival in economic growth I find difficult to believe.”

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Government criticised over missing OBR forecast

The government should not announce major tax cuts without an independent economic forecast from the Office for Budget Responsibility, the head of a major economic think tank has warned.

Torsten Bell, the chief executive of the Resolution Foundation, said it is “almost inconceivable that any reasonable forecast from the OBR wouldn’t show debt rising throughout the forecast period.”

Speaking to MPs on the Treasury Select Committee he also criticised the government’s decision to tie the OBR’s hands.

“It is not a good idea to be announcing large, permanent tax cuts, without an underlying economic forecast,” he said.

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Downing Street says forecasts ‘fluctuate and change’ amid recession warning

Downing Street has said that forecasts can “fluctuate and change”, after the Bank of England indicated that it believes the economy is already in recession.

A Number 10 spokeswoman said: “The UK is not alone in facing slow growth, with Putin’s illegal invasion of Ukraine and weaponisation of energy presenting a global challenge for economies across the world.

“It’s not unusual for forecasts to fluctuate and change as further interventions are made. And that is why we are supporting households and businesses with high energy bills.

“This government has an unashamedly pro-growth agenda and the chancellor will be setting out more in his growth plan tomorrow.”

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Truss committed to 2019 manifesto, says No 10

Downing Street has insisted that the PM remains committed to the Conservatives’ 2019 election manifesto, despite Friday’s fiscal event set to mark a sharp break with the economic policies of the Johnson administration.

Asked if the Prime Minister saw the 2019 manifesto as redundant, the spokeswoman said “No.”

“I wouldn’t agree with that characterisation,” the spokeswoman said, when it was suggested the new government was deviating from the 2019 document.

Asked what parts of the manifesto Ms Truss is sticking to, the spokeswoman said: “I would point you back to what the PM has been setting out, and she’s been speaking at length this week from New York about her priorities for growing the economy, driving investment across all parts of the UK.

“And the action that we’re taking both in the long-term to support growing the economy and investment while in the meantime taking immediate action to support people with the cost of living.”

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Millions of mobile and broadband customers to see bills spike due to rate rise

More than 13 million mobile and broadband customers could see their bills rise by £100 next year due to inflation-busting price hikes, Citizens Advice has warned.

The charity has found nine out of 10 broadband customers and seven out of 10 mobile customers are with providers who can hike prices halfway through a contract.

Many providers are set to increase prices up to 3.9 per cent beyond inflation.

Citizens Advice warned that with recent estimates putting inflation at 12.6 per cent in January, mid-contract price hikes will be much higher this year than in previous years, at a time when people are least able to manage them.

It found that one in three mobile and broadband customers facing price hikes has already cut back on everyday essentials such as food, energy and clothing.

It is calling for providers to axe the price rises, which it predicts could cost consumers £2.5 billion more next year.

The charity warned that access to mobile and broadband internet must remain affordable as most people rely on them for employment, managing benefits and staying in touch with loved ones.

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Chancellor confirms NI increase will be reversed

Chancellor Kwasi Kwarteng confirmed the national insurance increase which came into effect in April will be reversed from 6 November.

Ahead of his mini-budget on Friday, he said: “Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.

“Cutting tax is crucial to this – and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the levy will help them grow, whilst also allowing the British public to keep more of what they earn.”

The 1.25 percentage point increase in national insurance was announced by former chancellor Rishi Sunak to help fund health and social care.

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Recession is Tories fault – Lib Dems

The Conservative Party is to blame for UK’s recession, the Lib Dems have said.

Earlier the Bank of England said it expected GDP to drop 0.1 per cent over the current quarter, indicating the UK is in recession.

Responding to the news Ed Davey, the Lib Dem leader, said: “The blame for this recession lies squarely with Conservative MPs who have dithered for months and let the British people down.”

Suggesting the long Tory leadership campaign had delayed key moves, he said: “If urgent action had been taken months ago on energy bills and the cost of living crisis, then the UK economy wouldn’t be in this mess.”

“Instead, mortgage rates are spiralling, food prices are soaring and our country faces a grim winter recession with no real plan to get us out of it.”

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All the cost of living help available and how to get the payments

The rising cost of living is continuing to stretch budgets across the UK this winter, with warnings of more to come.

Energy bills are soaring, rents are increasing and inflation has hit record highs for several months in a row, all of which means living standards are forecast to tumble at their fastest pace since the 1950s as wages fail to keep up with rocketing prices.

My colleague Zoe Tidman takes a look at what help is available and how to get it:

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Rate rise will add £600 to some mortgages

Some homeowners could see their annual mortgage costs increase by around £600 as a result of the Bank of England‘s interest rate rise, a trade association has warned.

UK Finance said mortgage borrowers whose deal directly tracks the base rate will see their payments increase by around £49 per month – or £600 per year – on average.

The figures also showed that a borrower sitting on their lender’s standard variable rate (SVR) will typically see a monthly increase of just under £31, adding up to around £370 per year.

Nearly four-fifths (78 per cent) of residential mortgages outstanding are fixed rates, meaning these borrowers will not see the immediate impact of the Bank of England’s base rate hike on Thursday from 1.75 per cent to 2.25 per cent – the highest level since November 2008.

But, if they have been safely locked into their home loan for a while, they may find they get a bill shock when they do eventually re-mortgage.

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