| UK
Interest Rate: 5.25%
UK
Interest Rates Forecast: Further 0.25% rise likely in
April or May
5.5pc
in April or May?
A
new Reuters poll of 50 leading economists has found
that 39 of 50 economists polled expect an interest
rate rise to 5.5 per cent by June – up
10 per cent from the results of last month's survey.
The
poll also found that most economists expect interest
rates to peak at 5.5 per cent, probably remaining at
that level for the rest of 2007.
Ross
Walker of RBS (Royal Bank of Scotland), commented that
"We will probably still see one more hike",
believing that high wage settlements and inflation would
drive the Bank of England's next decision on rates.
Homebuyers
Expecting Continued Rises
Some
building societies have had to suspend some of their
fixed rate mortgage deals in recent weeks, due to a
huge increase in demand for these packages from home
buyers fearful of continued interest rate rises.
New
figures from the Council of Mortgage Lenders show that
a massive 85 per cent of first time buyers chose to
take a fixed rate mortgage in January, reflecting their
concerns over rising interest rates, and perhaps providing
an indicator of how tightly buyers' budgets are being
stretched by current house price levels.
70
per cent of buyers moving house also stayed with or
moved to a fixed rate deal, showing that it is not just
first time buyers who are affected by the current level
of interest rates.
On
a related subject, a quarterly Bank of England survey
showed that the public also expected inflation levels
to remain high in coming months, a factor which is directly
related to interest rate decisions.
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