12 January 2007
Consumers who have taken out a secured loan recently will soon be feeling an extra pinch thanks to a decision from the Bank of England (BoE) which saw the base rate of interest rise by a quarter of a percentage point to 5.25% yesterday.
The decision from the BoE's monetary policy committee (MPC) came as a shock to the vast majority of financial analysts who had not expected a rise until later in the spring.
Many believed that the MPC would want to wait and see the impact of the wage increases due this month and to see how various factors were affecting inflation before deciding to raise the interest rate.
Consumers are unlikely to find the next few months any easer, with the BoE confirming that it was "likely that inflation will rise further above the target in the near term", leading to a further interest rate increase in the future, although the BoE did confirm that the expected decrease in energy and import prices would result in the lowering of it again.
The Building Societies' Association's director-general Adrian Coles issued a statement advising those with loans who were worried about repayment to contact their lender sooner rather than later so that they can help their customers "before things spiral out of control".
Peter Tutton, policy officer at Citizens Advice, also called for lenders to be "sympathetic" to their customers who were struggling with their repayments following yesterday's announcement.
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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