10 January 2007
Consumers who have taken out a secured loan are nervously awaiting the monthly decision by the Bank of England's (BoE) monetary policy committee (MPC) as to whether the base interest rate should be raised, lowered or held at the current 5%.
The decision, to be announced on January 16th, could affect the thousands of British consumers who currently hold a secured loan, as an increase would adversely affect the amount they shell-out in repayments each month.
Despite concerns that the impending 4% wage increases could convince the members of the MPC to raise the interest rate, many financial experts are predicting that the effects of the wage growth will not impact the national economy immediately, negating the need for an interest rate rise.
Experts have also agreed that the fact that all nine members of the MPC voted to hold the interest rate at 5% last month is a good indicator that the rate will remain there for the next month, although almost everyone is expecting an increase at some point in the next quarter.
In the long term however, consumers will not be hit that badly, according to Howard Archer, chief UK and European analyst at research firm Global Insight.
"Even if interest rates do rise to 5.25% in February or March, we anticipate that the BoE will be able to trim them back to 5% later on in the year as modestly softer growth, intense competition through the supply chain, price-conscious consumers and a strong pound limit underlying price pressures," he predicted.
If you're a homeowner and looking for a secured loan, uSwitch.com can help you find the loan that best suits your circumstances. Even if you've had credit problems, we may still be able to find you a loan through our our impartial loans comparison service.
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