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Interest rate increases

11/01/2007

The interest rate has increased to 5.25pc, by the Bank of England, giving people today a difficult time and raising the mortgage costs for homeowners.

The interest rate increased from 0.25pc to 5.25pc by the Bank’s Monetary Policy Committee, this has been the 3rd increase since August time.

Many mortgage lenders also analysts expected house prices to rise more and more each year. They feel it is increasing but for the first quarter of the year it will be slower than last year.

Painted trading screens were red, however the benchmark index trading 13.1 points lower at 6147.6.

House builders suffered intensively, with persimmon a big blue-chip drainer, down 3.5pc at 14 pounds 20 pence. The redrow fell 4pc to 663p and Bovis Homes retreated 10 pounds 45 pence to 3.6pc.

Running average, the pound soared on foreign exchange markets and yields on UK government debt bounced.

The Bank’s governor, Mervvn King, following year warned consumers about taking more money because the house hold debt had increased, nearly doubled since the year 1999, this stretching 150pc of people’s income.

Mervvn King also told people in November that policy makers might be looking for signs of any inflation.

Surveyed by Bloomberg all 52 economists before the agreement had expected the central bank to leave any rates standard. The Economists looked at different perceptions about whether a rise in interest rate was worth proceeding.

“This was a tough but wise decision. The MPC needed to stamp down on inflation given the upside risk at present.” Said Graeme Leach, he is a chief economist at the Institute of Directors.