Expert Evaluation Of Home Mortgages: Are Rates Going To Increase?

Rates of interest will rise by the end of the year, economists are predicting.

Leading economists are speculating that the Bank of England will probably announce a one quarter point rise in the basic cost of borrowing for people trying to get a mortgage or loan prior to the end of the year.

While the Monetary Policy Committee (MPC) voted recently to hold interest rates for the eleventh consecutive month, many economists are claiming that economic pressures, especially rising inflation, will force a rate hike in the medium term.

Milan Khatri, the Chief Economist at the Royal Institution of Chartered Surveyors (RICS), claimed: RICS expects the Bank of England to follow the lead of other world central banks, and raise interest rates later this year by a quarter of one per cent.

With a rise seeming probable within the coming months, many fixed-rate mortgage suppliers have increased their rates in anticipation, while wider market pressures have already seen fixed rate mortgages become more expensive over the past year.

Fixed-rate mortgage loans now look expensive as a result of the base rate rise above five per cent, said Ray Boulger, in response to mortgage broker, John Charcol.

However, Mr Boulger predicted that fixed-rate options would continue to find a market, commenting: There will always be a large market for fixes due to many individuals wanting the security of knowing exactly what they're paying out every month.

Meanwhile, mortgage advisers are warning that tracker home loans could turn out to be more expensive than their holders originally anticipated if the predicted rate hike is accompanied by a second rise within the next two years.

Those having a tracker mortgage will, consequently, be happy to hear that not all economists are forecasting an interest rate increase anytime soon.

Jonathan Said, Senior Economist at the Center for Economic and Business Research, states, "Regardless of recent economic data, interest rates are much more likely to hold than move throughout the year."

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Expert Evaluation Of Home Mortgages: Are Rates Going To Increase?

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