The Bank of England's monetary policy committee (MPC) has today announced that interest rates are to rise by 0.25 percentage points to 5.75 per cent. According to the committee, credit uptake and spending are growing "rapidly" as global economic expansion continues to increase. With this latest rise the third to have taken place over the course of 2007, borrowers could soon find pressure on their personal finances increasing.
Commenting on the figures, Mike Naylor, uSwitch personal finance expert said: "The impact of three base rate rises this year should not be underestimated - this is going to hurt a lot of households, especially those with variable rate mortgages. Thankfully, consumers can still cover the cost of the mortgage interest rate rises just by being a bit more savvy and switching their current account, credit cards and loans to get a better deal."
As a result of the July increase, consumers are set to find their secured loan costs have risen by 677 pounds since the start of 2007. However, with the financial comparison website reporting that interest rates are expected to rise up to the six per cent barrier by the end of the year homeowners could find their ability to make mortgage repayments squeezed even further. Mr Naylor added that "it is more important than ever" for consumers to start to consider changing personal finance products in order to get the best deal possible.
He suggested that by changing energy suppliers Britons could save up to 325 pounds a year. However, if consumers fail to do so than the uSwitch expert claimed that they could risk paying more money than necessary on their credit cards, overdrafts and mortgages.
Following the fifth MPC rise in under 12 months, managing director of moneysupermarket Stuart Glendinning claimed that the latest hike could be "the straw that breaks the camel's back". He added that the effect of various increases to consumers' monthly outgoings could be "devastating" as their personal finances face further pressure. Figures from the monetary company also revealed that following the 'shock' rise in January just over half of all homeowners claimed to have been adversely affected but, with two increases taking place since then, a "bleak" outlook was predicted for many consumers.
Meanwhile, Mark Blackwell, head of corporate and specialist lending for Cheltenham & Gloucester, suggested that the MPC could have "made the right move" by increasing the cost borrowing. He claimed that despite signs of the economy slowing down, house prices continue to rise as secured loan growth "remains resilient". Mr Blackwell also asserted that despite predictions among the financial market that another base rate increase will happen by the end of 2007, he suggested that such a move may not transpire until next year and could actually be a decrease.
Although Scottish Widows Investment Partnership pointed out that such a rise beyond the 5.75 per cent barrier were likely to be unnecessary, "there is a clear risk that an impatient MPC may push rates up to 6 per cent or beyond over the next few months".
Author Resource:-
Abbi Rouse writes for Loan-Arrangers .co.uk where visitors can compare loans online. Then apply for the best rate secured loans and bad credit loans available.
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