Date:Thursday 23rd December 2010
Author: Max Freedman
It is unlikely the mortgage market will need to deal with a significant rise in the base interest rate in the short term, according to an expert from Firstrung.
Chief executive of the company Paul Holmes explained that such a move would hurt the UK’s economic recovery, as well as putting the country out of step with other nations in the global economy.
He said: “If the rates did rise [and] crept up by two per cent and lenders passed on that two per cent rise to borrowers, at the moment, that would be quite catastrophic.”
Mr Holmes pointed out that repossessions would be likely to increase if the base rate went up, as the added expense could be too much for many households to cope with financially.
The CBI recently predicted that the consumer prices index figure for 2011 will be higher than the government’s two per cent target, which could lead to the Bank of England raising interest rates gradually until mid-2012.