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UK Interest Rates Forecasts and Predictions for Home and Property in the UK

Checkout this weeks latest interest rate forecast here

Interest Rate Update 25/8/10

UK Interest Rate: 0.5%

UK Interest Rates Forecast: Low rates could give false sense of security

Mortgage Lending Up 5% In July

Total mortgage lending rose by 5% in July, according to new figures from the Council of Mortgage Lenders. Despite the 5% rise, however, it was still 3% below the level seen in July 2009.

Commenting on the figures, CML economist Paul Samter said:

"It is difficult to see anything other than a slow market for the rest of this year as underlying activity remains subdued. The rest of 2010 is likely to see rather lower lending and transaction numbers compared to the same period last year."

Could Interest Rates Hit 8%?

Most economists have different opinions on the future of interest rates, some more extreme than others. One person who is at the far end of the spectrum is Andrew Lilico, chief economist at the Policy Exchange think tank.

Lilico recently warned that there is a high risk of a return to "boom and bust" and that one of the consequences of this would be high inflation – and high interest rates. Lilico believes that in the event of the RPI measure of inflation reaching 10%, interest rates could have to rise to 8%.

The result of this would be that mortgage rates would probably exceed 10% - and might even reach 12%-14%, a level not seen since the early 1990s.

I would stress that Lilico's forecast is considered fairly extreme – but there is an important point to be made. A Bank of England rate of 0.5% is not normal and cannot last forever. One day, interest rates on mortgages will have to rise. Homeowners need to start planning for this now – rather than waiting until it's too late.

Background to this report

It can be difficult to accurately forecast the movements of the UK property market and to predict forthcoming changes to interest rates – that is why each week we analyze all the latest expert opinion on the state of the UK property market and condense it into a short, easy-to-read UK Property Market Forecast. We also do the same for UK interest rates, and each week produce an Interest Rate Forecast which provides the latest interest rate forecasts and predictions for the UK.

Understanding the factors that are influencing interest rate and property market forecasts can give you an advantage when considering a property purchase. The UK property market is affected by a number of different factors, which combine in sometimes surprising and quite localised ways. Our weekly UK Property Market Forecast takes all of these into consideration and provides a mixture of national and local property market forecasts.

In much the same way, movements to UK interest rates can sometimes be forecast. We provide the latest interest rate forecasts and predictions from leading UK experts, together with comment on what it all means and how factors like inflation and energy prices are influencing interest rate forecasts.

UK Interest Rates Forecasts and Predictions for Home and Property in the UK

Checkout this weeks latest interest rate forecast here

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