Nexuas

The Bank of England has raised base interest rates 0.25 per cent to 4.5 per cent. Mortgage lenders are all expected to follow suit.

Last month's 0.25 per cent rise does not appear to be cooling the housing market.

Analysts said the Bank's Monetary Policy Committee (MPC) increased rates by another quarter point in a bid to stem rises in house prices and consumer spending.

One leading economist has called for a rise of 0.5 per cent, saying the three separate quarter-point rises made since last November had had little impact.

Spare cardboard box anybody?

Neil W

Probably expect another rise next month also.

Cant see public spending reducing all the time there are these 0% borrowing offers about!

LC Geezer

Not enough of a rise in my opinion. 0.25% is hardly the shock that people need (says he who has just taken a fixed rate mortage at the April rate).

imlach

50 basis point rise expected before end of 2004.
That'll see the base rate at 5%.

JDM

I hope they keep putting the rates up so that I can actually afford to buy somewhere. The problem isn't meeting the monthly payments but the income multipliers which are getting to 5 times my wage for a house in the South East.
Anyone see these rates causing some price adjustments?

TopBanana

JDM yes of course they will... eventually!

r32

No good putting it up .25 at a time its not going to do any good, they need to stick it up by 4 or 5 %.


























Only joking!

Daz34

Gonna have to look for a lodger if this carries on

Tiggs

they will go to 5% then level...this will have little effect on house prices.

all thats happening there is the avarge age of 1st timers rises so you have ppl in late 20's buying the house with decent money...the houseing market needs a rate higher than 5% to slow it and the other parts of the econmy cant handle that level so it wont happen.

Faire D'Income

You have to remember that since the introduction of the Government's new inflation measure, mortgage repayments are excluded and as the MPC's primary function is to ensure that inflation stays below 2% any action towards the housing market is going to be muted.

If they weren't bound by these constraints then I'd bet on much larger interest rate rises but they are factoring in other parts of the economy such as manufacturing which can't take too big a hit on increased borrowing. If the Government were more honest about inflation and went back to the old systemt RPIX which included mortgage repayments, then the MPC could tackle personal debt levels and the overheated housing markets in one go.

Faire D'Income

Well, why don't you? There are plenty of lenders willing to give you a Euro mortgage and if you can crystal ball currency fluctuations then you'd do far better than the major lending institutions.

imlach

One UK lender currently does UK mortgages based on the US fed interest rate - which is currently only 1-2%.

So, you CAN take advantage of overseas interest rates if you want.

Faire D'Income

Not necessarily - it depends on what the Sterling exchange rate is vis a vis other currencies which at the moment is fairly strong but weakening against the Euro and Dollar.

JDM

Don't higher interest rates mean the pound gets stronger against currencies with lower interest rates?


I imagine not from the above comment but if not, why not?