Interest rates LIVE: BOE warns of surging inflation as mortgage repayments set to soar

FTSE 100 Index steadies after warning from Bank of England

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Inflation will hit four percent this year while interest rates stay at a stubborn all-time low of 0.1 percent – disappointing news for long-suffering savers. The central bank has hinted that a slight increase in interest rates next year could be needed to prevent rising prices from spinning out of control. With most of the economy back open and businesses reporting a strong return, the central bank’s monetary policy committee (MPC) has predicted the economy would grow by a healthy eight percent in 2021 alone – a slight increase from their 7.25 percent prediction in May.

By this forecast, the economy would regain its pre-pandemic level of activity by the end of this year.

However, with inflation knocking at the door, mortgage repayments will likely soar as rampant demand keeps the property market strong.

Imran Hussain, director of Nottingham-based independent mortgage broker, Harmony Financial Services, said: “The rate of price growth may be cooling but the property market is as strong as Thor’s hammer.

“First-time buyers, in particular, are itching to get onto the property ladder with savings made during the lockdowns of the past year and family assistance.

“As long as they are able to be approved for a mortgage, activity levels should remain strong until the end of the year.

“The key driver of property prices at the moment is weak supply and rampant demand.

“We’re still seeing an average 16 buyers for every home that comes to the market.”

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08:11 Bank of England chief, Andrew Bailey, lashes out at criticism of quantitative easing

Andrew Bailey has snapped at the Lords committee who referred to his strategy of quantitative easing as an “addiction”.

The Lords committee had published a report last month titled “Quantitative easing [QE]: a dangerous addiction?”

A title Mr Bailey was extremely unimpressed with, insisting it was inappropriate language for parliamentarians to adopt in this context.

Appearing at a press conference yesterday Mr Bailey said: “I’m going to be very blunt.

“First of all, I think the House of Lords should not use the word ‘addicted’.

“That is a word that has a very damaging and very particular meaning to many people who are suffering. I think it is wrong to use that word loosely and frankly I think it was a very poor choice of language.”

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