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UK tariff hike hits consumers

According to an economist, the expected significant increase in key interest rates of the British central bank will primarily affect real estate owners. “This will inevitably affect homeowners whose fixed-rate contracts expire,” Michal Stelmach, an economist at audit and consulting firm KPMG in London, told the German Press Agency.

People in Great Britain are already suffering from rising energy and food prices. Companies that rely heavily on variable-rate loans for financing are also affected, Stelmack said.

The Bank of England is expected to raise its key interest rate significantly from the current 2.25 percent on Thursday to bring inflation under control at a whopping 10.1 percent. A 3 percent increase is under discussion, which would be the highest increase since 1989.

“Mortgages constitute the largest share of household debt and three-quarters of total financial liabilities,” the analyst said. It’s true that 86 percent of mortgages currently have a fixed interest rate. But 40 per cent of mortgage lenders will switch to a higher interest rate within the next 12 months. In Great Britain, the fixed interest rate usually applies only for a few years of the purchase.