Rising mortgage rates are pushing more care homes towards the brink of closure, leaders have warned.

The stark warning comes after the Bank of England increased mortgage rates by 0.5 percentage points to 5% in June.

Care homes are being forced out of business by a perfect storm of rising costs, a lack of funding and labour shortages.

Knight Frank reported in May that the supply of care home beds fell for the first time by 177 in 2022, with an expected shortfall of more than 200,000 beds by 2050.

The lack of care home beds is, meanwhile, adding to NHS pressures with hundreds unable to be discharged from hospitals.

Professor Martin Green, chief executive of Care England, told Caring Times: “The increases in the mortgage rate is yet another blow for many care providers who, because of underfunding, general inflation, utility bill increases, and the difficulties of recruiting and retaining staff cannot continue to run services at a loss. There needs to be urgent action by the government to ensure that the outcome of the cost of care exercise is implemented across the entire country.”

Mike Padgham, managing director of St Cecilia’s Care Group, called on the government to provide more support for the sector highlighting that the recent interest rate rise came “on the back of on the back of the pandemic, high energy and food prices, low local authority and NHS settlements and staff shortages”.

Nadra Ahmed, chair of the National Care Association, told the FT: “We are facing some extremely challenging times. There are vulnerable providers out there right now and there are a lot [of homes] that will be on the market.”