Prices: UK rate hike hits consumers

According to an economic expert, the expected significant increase in key interest rates by the British central bank will primarily affect real estate owners.

Prices: UK rate hike hits consumers

According to an economic expert, the expected significant increase in key interest rates by the British central bank will primarily affect real estate owners. "This will inevitably hurt homeowners whose fixed-rate contracts are expiring," economist Michal Stelmach from the auditing and consulting institute KPMG in London told the German Press Agency.

People in Great Britain were already suffering from rising energy and food prices. Companies that are largely dependent on variable-rate loans for financing are also affected, Stelmach said.

It is expected that the Bank of England will raise its key interest rate again significantly from the current 2.25 percent on Thursday in order to get the enormous inflation of 10.1 percent under control. An increase to 3 percent is under discussion, which would be the highest jump since 1989.

"Mortgage accounts for the largest share of household debt and three quarters of total financial liabilities," the analyst said. It is true that 86 percent of mortgages currently have a fixed interest rate. But probably 40 percent of mortgage lenders would switch to a higher interest rate within the next 12 months. In Great Britain, a fixed interest rate generally only applies for a few years after purchase.

NEXT NEWS