Bank of England makes quarterly report
August 8, 2007 by admin
Filed under News, News-Mortgages
The Bank of England’s latest Quarterly Inflation Report, published today, seems to hint at future interest rate rises.
Charts in the report seem to suggest that inflation will not drop to the bank’s desired level of 2 per cent if rates stay as they are.
The base interest rate has been increased five times in the last 12 months, and currently remains at 5.75 per cent.
Economist James Knightley at ING said that the report was “mildly on the hawkish side”, and signalled that “interest rates have to rise”.
He predicted a rate of 6.25 per cent by the beginning of 2008.
With interest rates whole percentage points lower two or three years ago, mortgage holders on variable rates are currently being faced with big hikes in their monthly payments – a situation which will get worse still if rates rise yet again.
Analysts Morgan Stanley estimate that 70 per cent of mortgage holders in the UK are now on variable rates, compared with 20 per cent just five years ago.
