Are Rates Set For A Hike
Below is a MRR and PLR article in category Finance -> subcategory Other.
Are Interest Rates Poised to Increase?
Summary
Economists predict that interest rates may rise by the end of 2006, potentially impacting those interested in mortgages or loans.
Article
Economists anticipate a quarter-point increase in the Bank of England's base borrowing cost before year's end. Although the Monetary Policy Committee (MPC) recently decided to maintain interest rates for the 11th month in a row, economic factors like rising inflation may drive a potential rate hike soon.
Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors (RICS), suggests that the Bank of England might follow the example of other central banks and increase rates by 0.25% later this year.
As a rate increase seems likely, many fixed-rate mortgage providers have already raised their rates in preparation. Over the past year, fixed-rate mortgages have become more costly, with Ray Boulger from mortgage broker John Charcol noting that such mortgages appear expensive unless the base rate exceeds 5%.
Despite the higher costs, Boulger believes that fixed-rate options will remain popular, as many people prefer the certainty of knowing their monthly payments.
On the other hand, mortgage advisors caution that tracker mortgages could become pricier than expected if a second rate hike follows within two years. Those with tracker mortgages might find reassurance in the fact not all economists foresee an immediate rise.
Jonathan Said, senior economist at the Centre for Economic and Business Research, argues that, despite recent economic data, rates will likely remain stable throughout 2006.
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