'More pain to come' for Brits as mortgage rates rise, former banking chief warns

26 January 2023 , 20:45

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More pain to come for Brits, Haldane warned (Image: AFP via Getty Images)

A former Bank of England bigwig warned of “more pain to come” for millions of households from rising mortgage costs.

Andy Haldane, who was the Bank’s chief economist until 2021, predicted real wages would fall again this year because of the impact of punishingly high inflation.

The Bank of England is forecast to hike its main interest rate from 3.5% to 4% next week to try to cool inflation, which has begun to ease.

That will hit millions of borrowers with variable rate mortgages and those looking for new home loans.

But Mr Haldane, now chief executive of the Royal Society of Arts, said: “It is painful and I fear there is more pain to come as those mortgage rate rises from last year begin to hit people’s bank accounts over this year.”

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Andy Haldane (David Haber/scunthorpelive)

High street bank TSB yesterday announced it was setting aside £55m for loans that might turn sour because of the worsening economy and the cost of living crisis.

But the lender said it had yet to see a marked increase in customers ­experiencing financial difficulties or missing payments.

Boss Robin Bulloch said: “The resilience of customers is quite remarkable.”

TSB announced it was setting aside £55million for loans (PA)

Mr Haldane, interviewed on BBC Radio 4’s Today programme, said: “The terrible double whammy of first Covid, and then the cost of living crisis, has and is causing huge amounts of financial stress for many businesses, many households and of course charities.

“We’ve had a lost decade and a half in terms of pay rises in inflation-adjusted terms.

“Last year we saw real pay fall and we are most likely to see that same happen again and that is putting acute financial stress and indeed mental stress on a great many ­households.”

Graham Hiscott