Twitter Facebook RSS FEEDS

Interest rates rise to six-year high

Thursday, 5 July 2007 12:00 AM

Interest rates have been raised by 0.25 percentage points by the Bank of England today seeing base rate reach a six-year high.

Interest rates are now 5.75 per cent, following the fifth increase since August 2006.

Though the interest rate rise was widely expected by experts, the effect it will have on the property market was not widely agreed on by industry analysts.

Some commentators believe the latest rise will be pushing the property market to the brink of a house price crash, with others saying it is more likely to tighten it further without threatening its stability.

"This latest increase in UK interest rates will further dampen housing demand going forward as first time buyers find their borrowing constrained, and households who are coming to the end of their fixed-rate deals face a big increase in their monthly payments," said David Stubbs, senior economist of Royal Institution of Chartered Surveyors (Rics).

"In fact, someone with a £100,000 mortgage who is coming off a two-year fixed-rate deal in the next few months will face an increase of around £100 in their monthly repayments."

However, Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA) said the rate rise could have more serious implications than reducing housing demand.

"We urge the Bank of England to seriously consider the potentially adverse effect of any further interest rate changes and the consequences that this will have on the housing market, especially bearing in mind how vital this sector is to the UK economy," he said.

David Bexon of SmartNewHomes.com went a step further, saying he was "appalled" by the Bank of England decision today.

Mr Bexon explained: "Has the governor forgotten that the ordinary home owning public is already stretched to capacity and will struggle to pay these escalating mortgage payments? With lenders no-longer offering attractive fixed-rate deals and charging exorbitant fees, borrowers looking to re-mortgage will be hit twice."

Similarly Robert Bryant-Pearson, of Allied Surveyors, believed today's rate rise would make the market more less stable.

"Current deals are far from competitive, leaving those coming to the end of a fixed-rate term particularly vulnerable," commented Mr Bryant-Pearson.

"With the threat of repossessions now paramount in the market and buyer confidence falling to an all time low, I urge the MPC to think very carefully ahead of next month's decision to ensure stability in the market."

Related stories

Bank of England

Interest rates expected to rise by June 2011

Higher interest rates could inspire mixed reactions, with mortgage-holders expressing dismay but savers feeling pleased.

 Tenants in capital see 12 per cent rent increase over last year as living standards squeezed. Image: Thinkstock

London rents rise to record high

Tenants in capital see 12 per cent rent increase over last year as living standards squeezed.
Experts expect interest rate rises in coming year

Interest rates expected to rise in next year

Most industry analysts expect the interest rate to be higher in a year's time, a survey has revealed.

 Row of houses

Homeowners remortgage to beat interest rates

With the Bank of England poised to push up the cost of borrowing, could now be a good time to remortgage the house?
Yellow-brick country house

Repossessions will soar if rates rise, warns Banks

The Citizens’ Advice Bureau says ‘tough love’ policy advocated by Banks would be “short-sighted and unhelpful”.

 Bath Crescent

Low interest rates leading to investor confidence

New research suggests that Britain's low interest rates are driving demand for investment properties.
Savings or mortgage repayments?

Mortgage-holders at risk from rising interest rates

More than seven million mortgage customers could struggle if interest rates were raised, the Bank of England has warned.

 UK residential properties

Variable interest rates could jump 600% by 2012

Mortgage customers with floating interest rates could soon be paying £200 more on their monthly repayments, business leaders warn.
Low rates are not the norm

Low interest rates 'will not be around forever'

Low interest rates are only going to rise in future and homeowners should prepare for this.

 Rates now lent according to affordability

First-time buyer rates 'not extraordinarily high'

The Daily Telegraph has published figures appearing to show that first-time buyers are getting a raw deal, but MyMortgageDirect says this is not the case.

Search property

Headlines

Directory

Alaris

Alaris Logo
Alaris specialise in quality Bathrooms and Kitchens along with many other unique products for your home. The range of kitchens, kitchen worktops and bathrooms is extensive and the highest quality so you are sure to find what you want. New bathroom furniture, bathroom suites, taps, showers and cabinets are added regularly.

Bathrooms365

Bathrooms365 Logo
Bathroom365 supply all areas of your new bathroom - leading-edge designed bathroom suites, stylish bathroom taps and showers, all styles and forms of shower enclosures and a vast collection of bathroom furniture.

Beds Direct

Beds Direct Logo
Whether you've just moved into a property and need to furnish it or just fancy having something new to sleep on, Beds Direct offer you a wide array of beds to order online or via the telephone.

Fitmykitchen

Fitmykitchen Logo
Fitmykitchen are specialist suppliers of kitchen appliances, sink taps, waste bins and furniture. So whatever you want from kitchen sink taps to waste bins look no further than fitmykitchen, UK, the specialist suppliers of kitchen appliances, stainless steel sink taps, waste bins and kitchen furniture.

MyStampDuty

MyStampDuty Logo
We help people buying property all over the UK to minimise Stamp Duty Land Tax on residential and commercial property. If you are looking at purchasing a new home or business premises over £500,000, contact us today by completing the form on the right

Oak Furniture Land

Oak Furniture Land Logo
For hardwood furniture, including Solid Oak, Mango, Mahogany, Sheesham, Acacia, Ash and Birch, look no further than Oak Furniture Land.

Propertywide

Propertywide Logo
Propertywide.co.uk is Countrywide plc's dedicated property website. Created to provide online access to all our estate agency, lettings and property related services, Propertywide.co.uk has been designed with the consumer at heart.

The 21st Century Radiator Company

The 21st Century Radiator Company Logo
Welcome to 21st Century Radiator Company. We supply a stunning range of traditional reproduction high quality cast-iron radiators and cast-iron baths. All our cast-iron radiators and cast-iron baths are brand new, fully tested and guaranteed for ten years.

Rated People

Rated People Logo
Whatever type of home improvement or garden remodelling project you have, Rated People can help you to identify the right tradesmen for the job in a way that is quick, easy, convenient and, as it is based on real-life recommendations, trustworthy.

Residential Land

Residential Land Logo
If you are looking for short or long term rentals in Central London, Residential Land have a portfolio of over 1200 flats and houses in the best postcodes across the Capital.

Simply Bedrooms

Simply Bedrooms Logo
Simply Bedrooms, a part of Sleepwell Bedrooms Ltd, supplying quality beds, wardrobes, sliding door wardrobes and bedroom furniture at low prices and great service, London and Home Counties Specialists.

Door Handles UK

Door Handles UK Logo
Door Handles UK is the UK's largest online range of Door Handle accessories, Door Hinges, Locks and Latches and so much more and all at genuine internet prices. We have a wide range of Chrome, Brass and Glass Crystal Mortice door knobs in both traditional and contemporary designs, whatever your taste and budget you will find a design to suit.

Woodlands Furniture

Woodlands Furniture Logo
We are an established family business situated in rural Herefordshire specialising in beautiful handcrafted classic reproduction furniture. Our comprehensive ranges are readily available from stock.

Join our directory aboutproperty.co.uk

Twitter

Join the conversation at #aboutproperty

Directory articles

Why increasing amounts of people are opting for house shares

London is an expensive place to live, however, house shares offer you the opportunity to enjoy the hustle and bustle of the capital for a fraction of the price you would pay to live on your own, making them a cost-effective way forward.

Why sliding door wardrobes are the best choice for small spaces

When bedroom space is at a premium, you need to be creative with the furniture you invest in. In terms of the wardrobe, you may want to consider those with sliding doors, as they are the most practical in small bedrooms thanks to the doors.

The durability of mahogany furniture is ideal for the office

For office-based businesses it is vital to invest in high-quality furniture that is both practical and comfortable to use. While there are many products to choose from, the benefits on hand with items made from mahogany mean it is an option you should be certain to consider.