University of Derby Student Mthabisi Mlauzi has been renting with his girlfriend in the city but after the landlord put the rent up by £100 a month, they are moving back in with their parents.

"I haven't lived with my parents for a long time. It's quite hard to be in that situation as an adult. It is quite a step back in our relationship," Mthabisi says.

The couple fell £1,600 into arrears as a result of trying to balance the rent with a £500 energy bill and had no choice but to rethink their living arrangements.

"We honestly thought we could get kicked out any day for about three months. We were living scared."

The 27-year-old says he broke down and cried when thinking about how he was going to manage everything, and thinks long term he will be driven to leave the country.

"We've been together five years and now we're having to stop things. As a man, I'm quite old school and I want to be able to provide and not being able to do that feels quite hard - I feel embarrassed about the whole situation.

"All I can see is just everything going up. I can't see things getting better. Eventually I'm going to have to end up leaving this country and look for opportunities elsewhere."

Robert Cuffe
Head of statistics

When the Bank of England raises interest rates, mortgages costs increase.

That puts pressure on the amount people can afford to offer for houses, which means less demand.

And if interest rates stay high for a long time, an increasing number of people will come off fixed-price mortgages (about 100,000 each month) to new, higher rates.

Some home owners will find higher monthly payments unaffordable, making them more likely to sell.

Mortgage affordability depends on other cost-of-living pressures like energy bills, wages and job security: the future of house prices depends on the economy as a whole.

But some lenders are already starting to see annual house price growth slowing driven by month-on-month falls.

Read more on house prices here.

The Bank of England, the UK's central bank, has warned that the UK faces a tough two years ahead - and the longest recession since records began.

It believes the economy entered a "challenging" downturn this summer, which will continue next year and into the first half of 2024 - a possible general election year.

It blames the UK's economic problems on very sharp increases in prices, especially for energy and food.

If you're looking for more information on what a recession means, and how it could affect you, click on our latest explainer here.

If you're just joining us or have been following but could do with a reminder of a busy day, here's a rundown of what has happened so far:

• At midday the Bank of England announced it had increased interest rates to 3%
• The rise of 0.75 percentage points is the biggest single rise in the cost of borrowing since 1989
• The Bank also warned the UK could be on course for the longest recession since reliable records began in the 1920s
• Speaking at a news conference the Bank of England's governor Andrew Bailey warned that there are difficult times ahead, but he is convinced the economy will recover
• Chancellor Jeremy Hunt says he remains committed to "fixing" the UK's economic problems
• Labour and the Lib Dems have been critical of the Tory government saying that families are "being left to pay the price for weeks of Conservative chaos

Many of us will be already conscious about rising energy bills.

Here, in 60 seconds, the BBC's consumer affairs correspondent Colletta Smith points to four discounts and payments which could help you cope with cost increases.

Reaction to the Bank of England's decision to raise interest rates is continuing to roll in.

The UK's central bank said many people will face a "tough road ahead" as it seeks to contain soaring inflation.

The Resolution Foundation, a think tank which focuses on low to middle income households, pointed out the cost-of-living crisis will affect many people beyond mortgage-holders.

Its research director, James Smith, said: "Everyone will be affected by prolonged double-digit inflation, but poorer households will be hit hardest by the surge in food prices and energy bills."

He said it provides a "sobering backdrop" for the chancellor's upcoming Autumn Statement on 17 November.

“The government will need to both calm the markets, while also protecting households from the worst of the cost-of-living storm.”

Image source, PA Media

Interest rates are big news, but if you're not familiar with what they are and how they affect you, we've put together a quick guide to cover the basics like...

• What is interest?
• Why all the talk about mortgages?
• How is the Bank of England involved?

Read the very quick guide to interest rates here.

Jessica Sherwood
BBC News

Image source, Guy Watts

Guy Watts, 58 from Somerset is a self-employed artist. He's on a variable rate mortgage and is concerned about interest rates going up.

"I left my regularly paying job. My mortgage was previously with Northern Rock, then they went into administration.

"It was taken over by a company called Landmark Mortgages, they put me on a variable rate mortgage, my income was a lot lower because I'd left my job before so I couldn't get a new mortgage anywhere.

"I've been stuck with Landmark's variable rate for 10 years now," he says.

Guy says the last few months in particular have been difficult, "just trying to make ends meet".

"I've cut really far back on expenditures. I'm really careful with gas and electric. I'm careful buying food. I'm, not going on holiday at all.

"All my household bills [are going] up substantially which makes things a lot harder - but the mortgage is the one is the worst."

If you're concerned about rising housing, energy and food costs, you can use our personalised guide to saving money, which includes tips on what help is available. Click the link here.

Ramzan Karmali
BBC Business reporter

The pound has slumped and the cost of government borrowing has risen in response to the Bank of England’s interest rate decision and warning of the longest recession on record.

The pound is 2% lower against the US dollar since the Bank’s announcement. The dollar is up against most major currencies today but the pound is by far the weakest. It has fallen to $1.1170 – a drop of more than 2 cents.

The yield – the cost of government borrowing – over 10 years has also risen sharply to 3.51% up from 3.39%.

After lifting its base rate to the highest level for 14 years, the Bank of England also warned that "many" homeowners will probably face higher payments.

Existing mortgage-holders on fixed-rate products, which make up about 80% of mortgages, will face an increase in repayments when their fix comes to an end.

Those coming off a fixed rate mortgage at 2.5%, renewing a mortgage of £130,000 borrowed over 20 years, or finding a new one, could see about £3,000 a year added to their bills if they locked in a rate of 5.5%, for example.

Of course, the cost of borrowing will vary according to how much somebody has borrowed, the terms of their new mortgage and when it is up for renewal.

But overall, the Bank expects that higher mortgage rates will weigh on consumers' appetite for spending.

More from the Bank's governor Andrew Bailey now, who has acknowledged the UK has experienced larger rises in interest rates as a result of government policy in recent months.

Describing what he called this "UK premium", he said that while interest rates in the US and EU have gone up as well since August, Britain's went up far more over the period of market turmoil since September's mini-budget.

It was important to note that the UK had seen this effect has "substantially unwound" at this point, he said, with markets returning to more or less where they were before the mini-budget on 23 September.

While he was reluctant to get into the politics of the situation, Bailey did acknowledge he had become acutely aware during a recent trip to Washington DC that people were increasingly questioning UK policy.

"That will have some lasting effect and we have to work hard to put that in the past, frankly," he added.

As we've been reporting, Andrew Bailey explains the sharp increase in energy prices has been caused by Russia's invatsion of Ukraine.

He insists the economy will bounce back and that inflation will fall.

"We cannot pretend to know what will happen to gas prices," Bailey adds.

"That depends on the war in Ukraine.

"But from where we stand now, we think inflation will begin to fall back from the middle of next year, probably quite sharply."

Image source, .

Veterinary surgeon Omar Zaghloul had hoped to buy his first home in England by the end of the year. He moved to the UK from Italy in October 2018 and has been renting in Derby for the last two years.

But when things "went south" after Liz Truss's mini-budget, he put all his plans on hold and is now even considering leaving the UK.

"A variable rate mortgage would have been a disaster," the 38-year-old says.

He has tried to find low mortgage rate offers and low deposit options but none have provided a solution.

"I cannot buy now. It's not the right moment to make such an investment and a long-term commitment.

"The trust that I had from when I moved to the UK from Italy is now not 100%. I'm really frustrated."

Unions are warning workers will suffer fresh financial hardship as a result of the interest rate hike.

The Trade Union Congress's head of economics Kate Bell says people are paying "a high price for the Conservatives crashing the economy".

She adds the interest rate hike will increase the risk of a bleak recession this winter, as well as hammering businesses and people paying a mortgage.

The GMB union's general secretary Gary Smith says the Bank of England has been "forced to step in again to try and salvage some stability from this train wreck of an economy the Conservatives have created".

He says the country is now suffering the effects of what he says is the Tories' terrible economic experiment, calling for a "grown-up" government to help them survive "this self-made Conservative crisis".

Meanwhile, Unite warned that the increase will plunge more workers into debt and financial hardship amid an "epidemic of corporate profiteering".

We've brought you some reaction from the government and also from Labour - so let's bring you some fresh comments from the Liberal Democrats.

Sarah Olney is the party's treasury spokesperson and, like Labour, apportions blame to the Tory government.

"They shamelessly crashed the market and left mortgage borrowers to pick up the tab," she says.

"Hardworking families are being left to pay the price for weeks of Conservative chaos.

"The public will never forgive the Conservative Party for this economic scandal."

A bit more from Bank of England Governor Andrew Bailey who is still speaking about the UK's economic position.

"This is a difficult time," Bailey says as he answers a quiestion from the BBC's economics editor Faisal Islam, "there is no easy outcome".

Image source, Bloomberg

The Governor of the Bank of England Andrew Bailey has been speaking after interest rates were hiked by 0.75 percentage points to 3%.

He acknowledged that eight rate rises since last December are "big changes and they have a real impact on peoples' lives".

But he said: "If we do not act forcefully now, it would be worse later on."

Alongside its decision to lift borrowing costs to 3%, the Bank of England has said that Britain was in a recession set to last until mid-2024.

In normal times, a country's economy grows. Its citizens, on average, become slightly richer as the value of the goods and services it produces - its Gross Domestic Product (GDP) - increases.

But sometimes this value falls, and a recession is usually defined as when this happens for two three-month periods - or quarters - in a row.

When this happens, it's a sign the economy is doing badly. It could see people losing their jobs and unemployment rising or school-leavers finding it harder to get their first job.

For more information on what exactly a recession means, and what can be done, click here.

Image source, Reuters

Andrew Bailey is now speaking at a press conference.

The Bank of England governor says that today's forecast shows "there is a tough road ahead".

He says the sharp increase in energy prices as a result of Russia's invasion of Ukraine has made the country poorer.

Bailey is convinced that the economy will recover.

A shallower but more prolonged shockpublished at 12:34 Greenwich Mean Time 3 November 2022

12:34 GMT 3 November 2022

Faisal Islam
Economics editor

The Bank has done something it doesn’t normally do in the published minutes of its decisions - it has given guidance that seems to suggest a peak in interest rates of about 4.5% next Autumn.

For those with a glass half-full - this is lower than the 6% assumed just a month ago in the post mini-budget market turmoil.

While government borrowing costs and the level of the pound has somewhat recovered after a series of U-turns since, mortgage markets and business loans are still showing some stress, adding to the prolonged hit to the economy.

The forecast predicts that the unemployment rate will rise to 6%, while household incomes will come down too.

It is a picture of a painful economic period, with the UK performing worse than the US and the Eurozone.

Indeed, what was forecast as a sharp energy recession just three months ago, is now a shallower, but more prolonged energy and mortgage shock.