Interest Rates

Baroness Neville-Rolfe Excerpts

Tuesday 10th November 2026 Lords Chamber

Asked by

[Baroness Neville-Rolfe]

To ask His Majesty’s Government what assessment they have made of the recent rise in interest rates and the effect of this on economic growth, inflation and on their borrowing costs.

[The Parliamentary Secretary, HM Treasury (Lord Pitt-Watson) (Lab)]

This is an important Question. Last week, the independent Monetary Policy Committee increased the Bank rate in response to the high inflation that was driven by the conflict in the Middle East. I should point out, however, that the Office for Budget Responsibility noted that higher rates would weigh on activity and increased borrowing costs, contributing, in the projection that we saw with the Budget, to the slowing of growth next year. Of course, higher rates should reduce inflationary pressure, which is itself essential for longer-term growth.

[Baroness Neville-Rolfe (Con)]

What does the Minister say to the millions of people whose mortgages will have become more expensive as a result of this rise and, more than likely, further rises in UK interest rates?

[Lord Pitt-Watson (Lab)]

It is a difficult question. We are living in uncertain times and things are difficult for people on mortgages. It will be different depending on the type of mortgage you have: is it a fixed-rate mortgage or a variable-rate mortgage? If it is a fixed-rate mortgage, you might be very pleased, when your mortgage is renewed, that we are getting medium-term inflation down, but I understand that it is more difficult for interest-only mortgages. I finish by saying that the Bank rate in May 2022 was 1%, but by August 2023 it was 5.25%—a 4.25 percentage point increase. I am sure that people who were on the Front Bench in those days will also be able to help answer the noble Baroness’s question.