2 July 2007
A predicted rise in interest rates this week and further rises to come will leave homeowners who are already struggling with mortgage repayments facing even tougher conditions, it has been predicted.
Analysts expect that the Bank of England's Monetary Policy Committee (MPC) will this week raise interest rates to 5.75% as its seeks to reign in inflation
Furthermore, it is anticipated that the rate will most probably surpass the 6% mark by the end of the year, resulting in significantly higher repayments for those with a secured loan.
Commenting on the MPC's likelihood of enacting a rise and its probable impact on homeowners, Fionnuala Earley of Nationwide said: "Clearly the MPC is keen to reassert its inflation credentials, so until there is categorical evidence that inflationary pressures are subsiding, it will remain vigilant and the risks to rates will remain on the upside.
"The hawks on the MPC further believe that the rate of economic growth needs to come back below trend to be able to achieve the inflation target. Higher interest rates will add to the squeeze on demand in the housing market in the short-term, helping to reduce the rate of growth in the second half of this year."
News of economists' predictions comes after recent figures from the Council of Mortgage Lenders showed that home repossessions leapt by 65% last year to 17,000.
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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