You are here: Home - Uncategorized -

Interest rates could rise again

Written by:

The Bank of England could well increase interest rates again this year, pushing up the cost of borrowing for mortgage customers.

Another rise is predicted despite the latest quarterly inflation report, which showed the level of inflation has dsipped sharply in the last month, and is expected to dip below its target level of 2% later in the year.

The bank has forecast that inflation would exceed 2% if interest rates don’t go above 5.25%.

“Consumer spending has accelerated over the past year anbd business investment has picked up sharply,” said Mervyn King, the governor of the Bank of England.

“Some of the doiwnside risks seem to have diminished, and asset prices and money and credit growth remain buoyant.”

The Bank has increased interest rates three times since Augist 2006, including one rate rise of 0.25% in January that was completely unexpected. The cost of a typical £100,000 mortgage has increased by almost £50 a month in that time.

Inflation fell dramatically from 3% in December to 2.70% in January, mainle as a result of reducing fuel and transport costs.

But the governor said the outlook for inflation remained unclear:
“Inflation at 2.7% does not mean we can ignore concenrs about inflation ahead,” he said.

King added that he hoped house price inflation would slow down this year from last years’ increase of 10%. A colling off would have the essect of bringing down general inflation, which is his remit.

“I would certainly expect that the 75 basis points imncrease in interest rates (since August) would have some effect on the housing market. Any softening would be welcome,” he said.

Most analysts expect the Bank to keep rate on hold for the next month or even two. A further increase could happen in May.


Tag Box




Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
Sexism is rife on Valentine’s Day

Women should offer to pay for dinner on Valentine’s Day but men should refuse to take their money, a survey...