Families are facing Christmas mortgage misery after the Bank of England hiked interest rates today.
The Monetary Policy Committee has raised the base rate by 0.25 percentage points to 4 per cent. It is the first rise since August 2023.
For many homeowners the move will effectively wipe out the cost of living help announced by Labour in the Budget last week. Those on typical tracker mortgages could see monthly payments rise £31, and variable deals could go up around £14.
The increase was expected despite markets betting that the US midterms battering for Donald Trump could ease the Middle East crisis. That has been the biggest factor driving up inflation, but Brent Crude has tumbled to around $95 from $115 before the elections.
For many homeowners the move will effectively wipe out the cost of living help announced by Labour in the Budget last week
Pressure on the MPC to take action has grown since official figures showed headline CPI inflation rate rose to 3.5 per cent in September, an 11-month high. The Bank's target is 2 per cent.
Inflation is expected to gather pace this winter after Ofgem's energy price cap rose by 3.6 per cent for a typical household on October 1. It had been set to jump again by 22 per cent in January.
Other central banks have already increased their interest rates, including the US Federal Reserve which did so last month for the first time in three years.
The MPC was also taking into account other economic indicators including that the UK's unemployment rate fell to the lowest level in more than a year in the three months to August, to 4.7 per cent.
The economy unexpectedly grew in August, by 0.1 per cent, suggesting resilience in the UK despite pressure on consumer spending and wider volatility because of the Iran war.
Bank of England Governor Andrew Bailey, who has been in the position since 2020
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