Following the government's decision to cut taxes and borrow more, the Bank of England has warned interest rates could rise after the value of the pound fell. 

That could see a big impact on the total cost of borrowing along with people's personal finances. 

And with rates rising, lenders have pulled mortgage deals and are concerned people will not be able to pay them back. 

How high could interest rates rise? 

The Bank of England has raised interest rates from 0.5% to 2.25% marking it the highest level in 14 years on September 22. 

They added that they will "not hesitate" to increase interest further following news that the pound had fallen to a record low against the US dollar. 

There have been rumours of what the rate could rise to, with some suggestions that it could reach 6% by next year. 

York Press: PAPA (Image: Newsquest archive)

Interest rate policies are decided by the bank's monetary policy committee that meet every month. 

However there had been some speculation that it would call an emergency meeting to handle the crisis, but they shared it would wait until their planned meeting on November 3. 

It is currently under pressure to increase rates to 2% however prices are rising at nearly five times that level. 

How will interest rates affect mortgages? 

Interest rates rising could impact two million people on tracker and variable rate deals and will likely get an immediate increase in their monthly payments. 

The increase of 2.25% would mean that those on typical tracker mortgages pay about £49 more a month. Those on standard variable rate mortgages face a £31 jump.

It comes following increases made during the recent rate rises, compared with the pre-December 2021 where tracker mortgage customers are paying about £216 more a month, and variable mortgage holders about £163 more.