Interest rate rises are meant to bring down inflation - they haven't. So why are we all paying more on our mortgages?
The tight labour market has contributed to domestically-generated inflation, as opposed to externally-generated inflation, of the kind seen in the prices of oil, grain and fertiliser as a result of the war.
Another factor, which has again affected the UK more than many of its peers, is the contraction in the labour force since the pandemic. This is due to a combination of factors, including more over-50s opting for early retirement and an increase in the number of people, but the impact is the same - it creates skills shortages.
Many more Britons own their homes outright now than during previous periods during which interest rates rose - indeed, more Britons now own their homes outright than those who either have a mortgage or rent.At the same time, the majority of homeowners who still have a mortgage now have a fixed rate home loan, rather than a variable one.
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