According to a warning from senior economists, interest rates could spiral upwards to 7.5 per cent, as inflation soars. Nine leading economical strategists have openly condemned the Bank of England Monetary Policy Committee. The news is grim for mortgage borrowers, many of them first-time buyers, who are hurrying to secure a fixed-rate mortgage .
The Bank of England is almost certain to increase interest rates next month, as the consumer price index (the benchmark of inflation) has now hit 3.1 per cent - the highest level for a decade.
One of the nine who wrote an open letter slamming the MPC, Tim Congdon, reportedly commented: "Inflation is back and it's going to get to 4% by the middle of next year. It's not as bad as earlier cycles, but it's nevertheless bad and it's going to end the usual way. Rates will have to go to 6 to 6.5%, may have to reach 7.5%."
Recently, lenders have pulled fixed-rate mortgages off the market, and bargains are becoming harder to secure. Mortgage borrowers were advised to consider affordability not just in the short-term, but in the future as well.
Interest rates could hit 7.5 per cent, mortgage borrowers told
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Interest rates could hit 7.5 per cent, mortgage borrowers told
Tue, 24 Apr 2007
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