The speed at which the Bank of England eventually decides to raise interest rates will have a major influence on how many repossessions there are in t…
The speed at which the Bank of England eventually decides to raise interest rates will have a major influence on how many repossessions there are in the UK, an expert has said.
Ray Boulger, senior technical manager at John Charcol, said: “The longer the timeframe before bank rates start to go up, the less quickly I think we will see repossessions go up because clearly one thing that would tend to push repossessions up is if interest rates go up too quickly.”
Such a situation could see hard-pressed homeowners facing large increases in the cost of their mortgages and this may leave some unable to pay, not least people who are struggling now with rates at a record low.
Householders faced with such problems may consider individual voluntary arrangements, as these can freeze interest and reduce monthly payments, therefore offering more breathing space and enabling people to stay in their homes.
At present, the likelihood of a jump in the base rate from its current 0.5 per cent level may appear less likely to occur in the near future, as this month’s meeting saw just two of the nine Monetary Policy Committee (MPC) members supporting a hike.
This happened because Andrew Sentance, a persistent supporter of rate hikes since last year, left the MPC in May and his replacement Ben Broadbent voted to hold the figure in his first meeting.
However, when the base rate does rise there may be the swift succession of increases Mr Boulger warned of, as the history of the MPC shows it has done this in the past.
A Lloyds TSB study published this month revealed the body increased the figure four times between September 1999 and February 2000 and on five occasions between August 2006 and July 2007.
By James Francis