| UK
Interest Rate: 4.75%
UK
Interest Rates Forecast: Rising to 5% shortly
Inflationary
Pressure Continues
Continued
inflationary pressure this week has seen the pound gain
strength against both the Euro and the US dollar, pushing
the exchange rate to over $1.90 to the pound. September
and October have also seen an increase in the number
of mortgage approvals and continued rises in
house prices, adding to the concerns over current
inflation levels.
All
this means that the case for an interest rise
to 5% when the Bank of England's
Monetary Policy Committee meets next week seems unassailable.
More to Come?
Indeed,
many economists are now beginning to predict a further
rise to 5.25% in the first few months of next
year, as was recently suggested in a report published
last week by the National Institute of Economic and
Social Research.
Borrowers Not Concerned
Perhaps
surprisingly, despite the likelihood of increases
in interest rates, a survey by the Alliance
& Leicester found that many mortgage borrowers were
not concerned at the prospect of rate rises, with 45%
of those surveyed believing that they could afford it,
and 33% on fixed rate mortgages and thus unaffected.
Coincidentally,
figures from Mortgage Direct showed a 20% rise in buyers
choosing fixed rate mortgages in the wake of August's
interest rate rise, but other lenders have contradicted
this.
A
survey carried out by UCB Home Loans revealed that 64%
of mortgage intermediaries have seen no change in the
popularity of tracker mortgages, with most buyers believing
that interest rate rises would not be significant enough
to cause problems.
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