Interest rates to go up again? - April 2007

Lenders have started to withdraw their fixed-rate mortgage products in preparation for a possible Bank of England (BoE) interest rate rise!
Alliance & Leicester pulled its fixed-rate deals on Wednesday, and there are rumours that two other major mortgage lenders will follow shortly.

Lenders often withdraw mortgages when interest rates rise and some analysts believe that interest rates may go up to 5.5% or even higher in May!

Lenders base their borrowing costs on money market rates, which in turn are linked to the BoE’s rate. On Wednesday, the UK inflation rate rose to 3.1%, which was higher than expected.

With that feeding through into the money market rates, this will result in higher costs for lenders and they will pass these on to us the consumers.

All of this means higher interest rates and higher interest rates mean…bigger monthly mortgage repayments.

But its not all gloom and gloom -at least it’s sunny outside today!