Surprise interest rate rise
January 12, 2007 by admin
Filed under News, News-Mortgages
The Bank of England has stunned economists by raising the interest rate to its highest level for six years.
In the build up to the decision being announced, it was considered by almost everyone in the industry that the rate would be held.
However, on Thursday January 11th, it was announced that the interest rate would rise by 0.25 per cent, taking it to 5.25 per cent.
It is the third time since August that the Bank of England has increased the rate by 0.25 per cent and is bad news for people with mortgages.
“This is another rise in a short period of time that could hit some homeowners hard,” said Peter Tutton from Citizens Advice.
“We are already seeing a rapidly growing number of people falling behind with mortgage payments and in some cases threatened with repossession, and we know some people are taking on mortgages that stretch them to the absolute limit.
“Any increase in mortgage interest rates could spell disaster for people whose finances are balanced on the very edge of affordability,” he added.
The rate rise is good news for savers however, although the uncertainty created by today’s announcement is unstabling for most people.
“Markets are going to be wondering if this marks a more intensive process of monetary tightening,” Peter Dixon, economist at Commerzbank, told Reuters.
“Is the bank going to raise again? That’s the question that is going to be ringing round the dealing rooms this afternoon.”
