LONDON, July 12 Reuters Britain39;s economy is so far proving resilient to a surge in interest rates over the past year and a half, but it will take time for the full impact to feed through, the Bank of England said on Wednesday.

The Bank last month raised rates to 5 that had stood at 0.1 at the end of 2021, raising concerns about a hit to households, businesses and the broader financial sector that could push the economy into a recession.

But in a halfyearly assessment of the health of the financial system, the BoE said there was no reason for alarm.

The UK economy and financial system has so far been resilient to interest rate risk, BoE Governor Andrew Bailey told a press conference.

We will continue to monitor credit conditions for any signs of tightening which are not explained satisfactorily by changes in the macroeconomic outlook.

The proportion of highly indebted households was rising, but even considering the higher cost of living with inflation at 8.9 in May it was likely to remain below the peak seen in 2007.

On Tuesday, average interest rates for new twoyear fixedrate mortgages the most common form of housing finance rose above their peak following last September39;s minibudget to a 15year high of 6.66, according to data provider Moneyfacts.

Britain39;s finance industry estimates 800,000 households will need to refinance onto more expensive mortgages in the second half of 2023, and a further 1.6 million in 2024.

The Bank said the typical mortgage…