Experts predict another interest rate hike in New Year
A number of financial experts are now predicting that the Bank of England will enforce another interest rate hike in the New Year following analysis of related data. Many had already predicted that this would happen, but the chances are now strengthened, according to experts, due to data that shows the strength of retail sales recently coupled with the success and rate of mortgage lending. The predictions come after a recent meeting relating to Bank of England policies.
According to figures from the British Bankers’ Association mortgage lending in the UK in November 2006 scored the highest monthly increase to date, with a rise of six and a half billion pounds. This indicates that the two recent interest rate hikes in August and November of 2006 coupled with soaring property prices in the UK has certainly not put consumers off when it comes to taking on mortgages and buying properties.
One economist from the Bank of America stated: "The risk that the BoE may go to 5.25 percent in February looks substantial." However, following a recent Bank of England policy meeting, another economist from JP Morgan stated: "The door is still open to the possibility of a move up in rates in February - but there was plenty in the minutes that gave vindication to our view that rates are on hold at 5 percent."
In the meantime, lenders have seen a rising trend in the number of people taking out fixed rate mortgages, and the rise in popularity of this type of borrowing may be due to the recent interest rate hikes coupled with the prospect of future ones, with borrowers wishing to enjoy the peace of mind that their repayments will remain unaffected should rates rise again in early 2007.
Alisdair Milton
3rd January 2007
More Information:
- Why Does The Interest Rate Of Your Mortgage Change?
The biggest difference between a mortgage and other types of loan is the fact that the interest rate changes throughout the term of the loan. Why is this? And which type of interest-rate arrangement is best?
