UK wages are rising at a record pace. That makes higher interest rates more likely

by half a percentage point to a 15-year high of 5% last month and warned of further increases if inflation fails to show signs of falling back toward its target of 2%. By making borrowing more expensive, the bank is trying to keep a lid on spending, which should get inflation down.

“Soaring wage growth .... gets us into the kind of wage-price spiral dynamics that central banks absolutely hate and usually do anything to avoid,” said Neil Wilson, chief markets analyst at Markets.com. Expectations of higher borrowing rates are having a knock-on effect across lending markets, particularly in the housing market.

Around 2.4 million fixed-rate mortgages are due to expire by the end of 2024, according to figures from trade association U.K. Finance. Households will be looking to lock in new deals, which as things stand, will be substantially more expensive.

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