![Markets predicted interest rates could hit 6 per cent by the end of the year [File image]](https://dailyobserver.uk/wp-content/uploads/2023/06/Markets-predict-UK-interest-rates-could-hit-6-by-end.jpg "Markets predict UK interest rates could hit 6% by end")
The Daily Observer London Desk: Reporter- Victoria Smith
Homeowners were yesterday facing further mortgage pain as the markets predicted interest rates could hit 6 per cent by the end of the year.
It came after official data showed UK wages rose at their fastest pace on record outside of the pandemic in the three months to April.
Average pay excluding bonuses jumped 7.2 per cent over this period, according to the Office for National Statistics (ONS) – although due to inflation salaries fell 1.3 per cent in real terms.
The jump in pay rattled nerves at the Bank of England, which has previously warned large pay rises for workers risks fuelling price increases.
This is a phenomenon known as a ‘wage-price spiral’, which increases pressure on the central bank to increase interest rates to keep inflation under control.
![Markets predicted interest rates could hit 6 per cent by the end of the year [File image]](https://i.dailymail.co.uk/1s/2023/06/13/21/71673795-12191503-House_prices_have_fallen_at_their_fastest_rate_in_14_years_as_su-a-19_1686689710434.jpg)
Markets predicted interest rates could hit 6 per cent by the end of the year [File image]
But while higher rates are good news for savers, mortgage holders are facing ever-higher repayment costs.
Santander this week became the latest major lender to temporarily pull its new mortgage deals due to ‘market conditions’. The higher cost of mortgages is also hitting the rental market, with landlord profits at their lowest level in 16 years.
Estate agents Savills warned there was a ‘real risk’ the squeeze on incomes could push more landlords to sell up.
The Bank of England has already raised interest rates 12 times since December 2021, when they were at 0.1 per cent, in a bid to bring down inflation.
Another hike in rates could come as soon as next week, with financial markets forecasting the Bank will raise rates from 4.5 per cent to at least 4.75 per cent, their highest level since 2008.
They are also predicting that rates will reach at least 5.75 per cent by the end of 2023 and could even hit 6 per cent for the first time since early 2001, according to data platform Refinitiv.
David Hollingworth, of L&C Mortgages, said yesterday’s data ‘wouldn’t bring any comfort for mortgage borrowers’.
‘It’s going to add more upward pressure… and exacerbate an already fast-moving market,’ he added.
A third of voters blame the Government for soaring interest rates, a YouGov poll has found. Chancellor Jeremy Hunt said yesterday: ‘We are really very aware of the pain felt by many families.
‘The biggest single thing that we can do to reduce the pressure on families is to support the Bank of England as they bear down on inflation and that is the number one priority.’
Downing Street said lenders should be prepared to help out mortgage holders who get into difficulties due to rising rates.
