Bank holds rates at 5.25% and warns they will stay high

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The UK economy is likely to see zero growth until 2025, while interest rates remain high for longer or rise further, the Bank of England has warned.

It came as the Bank left rates on hold for the second time in a row at 5.25%, their highest level in 15 years.

Rishi Sunak has pledged to get the UK growing by the end of the year, but the lower forecasts put this in doubt.

However, the bank expects inflation - the pace at which prices rise - to fall sharply in the coming months.

This means the prime minister is on track to meet his promise to halve inflation to around 5% by the end of the year.

Up until September, the Bank of England had raised rates 14 times in a row to tame soaring inflation which has been squeezing households.

It has led to increases in mortgage payments, squeezing borrowers, but also higher savings rates.

Despite the gloomy economic forecasts, Bank of England boss Andrew Bailey said it was "much too early to be thinking about rate cuts".

"We will keep interest rates high enough for long enough to make sure we get inflation all the way back to the 2% target," he said.

And Mr Bailey said: "We'll be watching closely to see if further rate increases are needed."

The most recent inflation figure was 6.7% in the year to September, but the Bank expects it to continue to fall as energy and food price rises ease and expects it to remain at around 3% throughout next year, above the Bank's target.

While the Bank is not predicting a recession, it expects zero growth from now, across the whole of next year - when there is likely to be a general election - and into 2025.

"UK economic growth is slowing," the Bank said.

Chancellor Jeremy Hunt promised there would be measures to get Britain growing again when he unveils the government's plans to try and boost the economy in its Autumn Statement later this month.

"The Autumn Statement will set out how we will boost economic growth by unlocking private investment, getting more Brits back to work, and delivering a more productive British state."

But Labour said 13 years of "economic failure" had "left working people worse off", while the Liberal Democrats called the interest rates decision a "cold comfort for the millions of hard working families".

Ebony Cropper's rent has gone up, making saving for a deposit to buy a home harder

Mortgage rates have shot up as the Bank of England has put up interest rates. That has affected first-time buyers, people remortgaging and those on variable and tracker deals.

In the UK, the rate on an average five-year, fixed-rate residential mortgage is 5.87%, down slightly from levels seen earlier this year but still high compared with a few years ago.

Ebony Cropper from Warrington and her fiancé are saving up for a deposit to buy their first home. But while they are budgeting hard, their rent went up an extra £45 a month in August making the job harder.

"We got engaged this year but then I think [the wedding] has got to wait because it's a big expense as it is for just one day and a house is more important," she told the BBC.

"It just feels a bit futile at the moment because your goal [of owning a home] is getting further and further away."

1. Make overpayments. If you still have some time on a low fixed-rate deal, you might be able to pay more now to save later.

2. Move to an interest-only mortgage. It can keep your monthly payments affordable although you won't be paying off the debt accrued when purchasing your house.

3. Extend the life of your mortgage. The typical mortgage term is 25 years, but 30 and even 40-year terms are now available.