Base rate hike to increase repossession risk soon?

Those struggling to pay their mortgages and who are worried about the possibility of repossession may benefit from seeking debt management help as the prospects of the base rate being raised soon appear to have increased.

Minutes published today (February 23rd) of the Bank of England’s Monetary Policy Committee meeting this month showed three members supporting an increase, while six opted to maintain the status quo on the base rate amid widespread disagreement about inflationary prospects.

Spencer Dale became the latest member to start advocating a rise, calling for a 0.25 per cent increase alongside Martin Weale, who voted for a hike for the second month in a row.

Andrew Sentance, who has been voting for a 0.25 per cent rate rise month after month since last summer, hardened his position by calling for a 0.5 per cent hike.

The MPC was also split on the quantitative easing question, with eight members voting to keep it at £200 billion and Adam Posen arguing for £50 billion more.

Overall, the direction of movement may strongly suggest pressure is growing for a change to monetary policy and those who have mortgages where a base rate rise will feed through into their repayments – which would be anyone without a fixed deal – may expect to have to pay more soon.

The next MPC meeting will take place on March 9th and 10th, two years after the current record low rate of 0.5 per cent was set.

July 2007 was the last month in which the base level of borrowing was actually raised.

By James Francis