Mortgage borrowers could expect the base rate set by the bank of England to remain at 0.5 per cent for the rest of the year.
The rate is unlikely to change from its historic low level, according to predictions made by Martin Bamford, chartered financial planner at Informed Choice.
He justified his opinion by explaining that higher cost of borrowing would not work in the favour of Britain's economic recovery. An increase in the base rate would also not help in controlling inflation levels, he added.
The Bank of England's Monetary Policy Committee is due to meet this month in order to decide the monthly rate of interest. The announcements will be made on Thursday (September 9th).
However, in the meantime there has been speculation in the market which suggests that base rate could be increased in order to combat the rising levels of inflation, which is currently above the two per cent target set by the government.
According to recent statistics released by the Office for National Statistics, the Consumer Price Index recorded yearly inflation at 3.1 per cent, which had dropped from the 3.2 per cent rate registered in June.
On the other hand, Retail Price Index inflation dropped to 4.8 per cent from five per cent in June.
The news comes after gloomy economic predictions were made by Ed Bowsher, head of consumer finance at lovemoney.com.
He stated that an increase in interest rates accompanied by rising levels of unemployment would result in more and more people finding it difficult to pay back the debts they have incurred.
Mr Bowsher said: "I suspect the banks will have to write off plenty of personal debt next year. Unemployment will almost certainly rise in 2011 and that will mean more people will have no prospect of clearing their debt at all." |
0 comments
