Cost of Living: Bank of England hikes interest rates to highest for 14 years

Homeowners are set to face the biggest single shock on their mortgage bills since the 1980s as the Bank of England hiked interest rates for the eighth time in a row.

By August Graham and Anna Wise, PA Business Reporters

Published 3rd Nov 2022, 12:19 BST

The Bank's base rate will rise to 3% from 2.25%, its highest for 14 years, and decision makers warned that more hikes are likely. It will help pile around £3,000 per year on to mortgage bills for those households that are set to renew their mortgages, the Bank said.

The Bank also warned that the UK could be on course for the longest recession since reliable records began in the 1920s. Gross domestic product (GDP) could shrink for every quarter for two years, with growth only coming back in the middle of 2024.

The economy has faced similarly long recessions in the past, but then the quarterly drops have been broken up with an occasional positive quarter. However the Bank cautioned that this forecast is based on interest rates reaching as high as 5.2%, which the Bank said it does not necessarily expect to happen.