Homeowners anxiously await MPC’s decision
April 2, 2007 by admin
Filed under News, News-Mortgages
The Bank of England’s monetary policy committee (MPC) is to announce on Thursday whether it will raise, lower or maintain the base rate of interest.
While most analysts have predicted that the interest rate will have to rise another quarter point before this summer, analysts are in disagreement about whether or not April will see a rate rise to 5.5 per cent.
Stephen Smith, director of housing at Legal & General, said: “Borrowers will be waiting to see if they are going to be in the red or the black in the base rate roulette next week.
“Rates are still at a relatively low level compared to 70s and 80s and many people would struggle with today’s debts at yesterday’s prices. Whilst the boom and bust has flattened out since the turn of the Millennium, borrowers are still facing a probable hike in rates in the near future.”
Mr Smith warned that June and August were likely to hit those with mortgages hardest, since they were the most likely months for a base rate rise. He compared them to Park Lane and Mayfair on a Monopoly board as “you just want to get through them without having to pay out more money!”
The Council of Mortgage Lenders predicted that recent interest rate rises would start to have an affect on the value of homes and that while prices would still go up by seven per cent, this would be a marked deceleration compared to previous years.
Fionnuala Earley, Nationwide’s chief economist, also predicted that a rate rise would not curb the rising level of value in the property market, adding: “The UK housing market will remain fairly firm in the short term, partly because of the momentum built up in the market that will take a few months to work through, but also because of supply constraints.”
If an interest rate rise does occur on Thursday, homeowners with a £100,000 mortgage would find themselves £15 worse off per month.
