Is the UK about to be hit with yet another interest rate hike?

Potential home buyers and existing homeowners have already been hit with a number of interest rate rises enforced by the Bank of England in the space of just six months.

In August 2006 the base interest rate stood at four and a half percent, but during that month the Bank of England announced a quarter of a percent rise, which took the rate to four and three quarters of a percent. In November of last year, the Bank of England announced a further quarter of a percent rise, which took the base rate to five percent.

And in an unexpected move in January 2007 the Bank of England raised interest rates by yet another quarter of a percent, taking the base rate to five and a quarter percent.

Experts are now predicting that the Bank of England could have another interest rate hike in store, which could be announced during the first quarter of the year.

According to a recent report by the UK business survey company BDO Stoy Hayward, the Bank of England is likely to tackle inflation by putting forward a fourth interest rate hike during the first quarter of the year. However, some think that the bank may now take a ‘wait and see’ stance before announcing any further interest rate rises.

Another hike in the interest rates could make life very difficult for those already struggling to get onto the property ladder as well as for those still repaying mortgages. The rises in interest rates has seen many people with variable rate mortgages struggling to keep up with repayments.

As for first time buyers, who have already been struggling to raise the necessary capital to afford a property in the UK, another interest rate hike could mean that the already slim chance of being able to get onto the property ladder disappears altogether.

Tom Smith
16.03.07

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