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Mark Carney downplays rate rise impact on mortgages

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Bank of England governor Mark Carney has downplayed the impact of today’s base rate rise on mortgage borrowers.

The Bank’s monetary policy committee has voted to raise the base rate to from 0.25 per cent to 0.5 per cent, the first increase in more than ten years.

But Carney says most mortgaged households will weather the rate rise.

In a press conference, Carney said: “Only a fifth of people with mortgages have never experienced a rate increase. Only half of those took out mortgages after the FPC introduced its affordability stress in 2014.

“That stress requires mortgages to be able to withstand an increase in mortgage rates of around 7 percentage points.”

Carney says that 60 per cent of mortgages are at fixed rates, and that even with this bank rate increase many households will be able to refinance onto cheaper deals.

He added: “While the sheer novelty of the first bank rate rise in a decade create some uncertainty around its impact, there are reasons to expect it to be no larger than usual.”

The last move in base rate saw it cut from 0.5 per cent in August 2016.

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