After increasing the cost of borrowing in July for the fifth time in less than a year, the Bank of England’s monetary policy committee has opted to hold fire and maintain the base rate at 5.75 per cent for another month at least.
But with the cost of borrowing already at a six-year high, there could be added debt management difficulties for consumers later this year as experts are not ruling out a rise to six per cent in the next few months.
“Homeowners already stretched by five rate increases in the past year alone can take stock for another month,” said Stuart Glendinning, managing director at price comparison website moneysupermarket.com.
“But they have the sobering knowledge their annual repayments on a typical interest only £150,000 tracker mortgage are £1,875 more than they were a year ago,” he added.
A report from the Consumer Credit Counselling Service earlier this year forecast that millions of homeowners would be “on the rack” financially for the duration of 2007.