4 May 2007
Consumers who have taken out a secured loan are set for even higher repayments following Mervyn King's announcement that it was imperative for Britain's interest rate to rise.
Financial experts have also predicted a possible rise in the number of secured loans being taken out as cash-strapped consumers look for alternatives to remortgaging their properties.
An unexpected high shopping boom strengthened the pound sterling even further against a dwindling US dollar, prompting the Bank of England's governor to declare that further interest rate rises were the only way to keep inflation down.
Speaking last Wednesday at the bank's tenth anniversary of independence, he confirmed that maintaining inflation at a tolerable level is the bank's most important challenge.
There is concern that a further increase in interest rates when the monetary policy committee meets next week could result in large numbers of debtors being falsely led into taking out individual voluntary arrangements (IVAs), plunging themselves further into debt.
Philip Long, a leading insolvency practitioner with PKF Accountants & business advisers, told Creditman: "No one is pretending that bankruptcy is a good thing but the reality is that, in the majority of cases, the terms of IVAs are too much for most people in serious debt to cope with."
"Another rate rise next week, with more to follow this year will simply make the position worse for them," he added.
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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