Charity warns hike in interest rates could lead to homelessness

The boss of a homelessness charity in West Sussex has said he is worried the rise in interest rates could force people out of their homes.

The Bank of England announced a 2.25 percent increase – their highest level since 2008.

CEO of Turning Tides, John Holmstrom, said: “In my experience, I have lived through hikes in interest rates; owner occupiers getting into arrears and leading to homelessness.

“It takes a few months for it to feed through, but I think what we're going to find is it’s going to affect first time buyers not being able to access accommodation because the interest rates go up and they can't afford to borrow.”

He added: “For those who have recently gone on to a big mortgages, if they're on a variable rate or their fixed time comes to an end, their costs are going to go up at the same time they're squeezed with higher fuel costs.

“That will lead to some arrears and people having to give up their home or be evicted.”

Mortgage borrowers whose deal directly tracks the base rate will see their payments increase by nearly £50 a month.

The Bank is also predicting a 0.1 percent fall in GDP over the current quarter, which means the country could already be in recession.

However, bosses claim the decision to lift rates is a bid to keep inflation under control and steer inflation - currently at 9.9% - back to its 2% target.