Interest rates: Mortgage holders react to news of freeze

Nicola is considering whether to take in a lodger as a last resort, in order to afford her new mortgage

Interest rates have been held at 5.25% by the Bank of England, after 14 consecutive rises. But they are still at their highest for 15 years. How are homeowners coping?

Nicola Valentine says she is "breathing a sigh of relief" on hearing that rates are being held.

But the tax accountant, from Isleham, Cambridgeshire, is still "hugely anxious" because her mortgage is due to go up by about £300 a month.

She bought her first home nearly two years ago on a 2.9% fixed-rate mortgage deal that expires in November.

"It took me years to get on the property ladder and I was so pleased at the time but lately it has felt like a nightmare," she says.

"I'm being told by mortgage advisers that the best thing is to fix. But my gut feeling is that the rates might come down in the next few years. Obviously it's risky."

The 40-year-old has cancelled TV and gym subscriptions, shelved plans to go away for New Year and stopped buying new clothes and takeaways but still does not know how she will find the extra money.

"I'm praying the rates have peaked now and will start to go down because this is really unsustainable for me. I feel completely helpless," she says.

Nicola, who is single and lives on her own, has been considering whether to take in a lodger to cover the additional cost.

"I don't like the thought of welcoming a stranger into my home but it's the only obvious thing to do.

"I thought my years of living in shared housing were behind me. This wasn't the dream. It wasn't the plan."

'Every rise has been like a knife in the back'

IT worker Richard has used up £50,000 in savings to try to get his mortgage rate down

Richard, 61, from Cambridge, says he is struggling to keep his head above water due to the previous increased interest payments.

The IT worker's fixed-rate mortgage ended earlier this year and he is now on a tracker mortgage, which cost £1,000 in fees to switch to. His monthly interest payments have increased from £260 per month to £807.

He describes the interest rates decision as a "small comfort".

"It would have been better if the Bank of England had come to their senses and reduced it. Each rise has been like another knife in the back," he says.

"I don't see how making people desperate to be able to pay curbs inflation as surely now anyone with a mortgage needs a pay rise."

Why has the Bank of England held the interest rate?

The UK's official interest rate, also known as the "base rate", currently stands at 5.25%, the highest for 15 years

Investors were split over whether interest rates would be raised again after figures showed a surprise slowdown in inflation, which fell for the third month in a row.

The Bank had been hiking rates since December 2021 in an effort to tackle inflation in the UK, which at 6.7% is much higher than its 2% target.

By raising the rate, the Bank hoped households would be encouraged to save rather than borrow money but some financial experts said further raises would risk a recession.

"To tighten further would have risked administering an overdose before the existing medicine has had enough time to fully take effect," according to Kitty Ussher, chief economist at the Institute of Directors.

But the decision might not mean the rate rises are over, says the BBC's chief economics correspondent Dharshini David. The governor of the Bank of England has previously hinted that rates are not likely to fall for some time and the decision was made by the narrowest of margins - five votes to four.

'We are just really tightening our belts'

Rachelle and her husband Darren say they have worked all their lives to provide for their children Emily and Jake and to live comfortably

Landlord Rachelle Gleed, 53, from Bishop's Stortford, Hertfordshire, says she is relieved rates have been held and "praying they start to go down now and hopefully stabilise at 3 to 4%".

The mother of two has one rental property with an interest-only mortgage deal that ends next month. Her new mortgage, fixed at a rate of 5.14%, is going to cost her an extra £1,000 a month.

"I can't pass that on to the tenants at the moment but we might have to reassess that next year," she says.

"We usually have a holiday booked for next year which we aren't doing and we are just really tightening our belts."

Rachelle and her husband, who both work full-time, are also worried about the mortgage on their own home.

"We did have a two-year fixed deal on 0.84% but that is ending soon and we will be changing to a tracker mortgage, in the hope rates go down, meaning our payments are likely to go up by around £900 a month," she says.

"I'm just planning to weather the storm and hope we survive."