Repossession risk hint as Bank governor discusses rate rises

Those who take out mortgages should be aware that there will eventually be a hike in interest rates, Bank of England governor Mervyn King has said.

Those who take out mortgages should be aware that there will eventually be a hike in interest rates, Bank of England governor Mervyn King has said.

Answering a question during a press conference as the Bank published its latest Quarterly Inflation Report, he said: "There's no doubt that people taking out contracts need to be conscious of the fact that at some point interest rates will need to return to normal."

Mr King added that borrowers need to be "conscious of their ability to handle a wide range of unexpected circumstances", but noted changes to interest rates are just one of these.

Others include their own personal circumstances, he commented.

Mr King emphasised the Bank is still ready to consider changes to its monetary policy, rather than sticking to a pre-ordained path in the manner of the US Federal reserve, which announced this week it will keep rates at near to zero for two years.

There is "no impediment" to the Monetary Policy Committee's options, he added.

People who are struggling with their mortgage payments already – possibly because of changes to personal circumstances like the loss of a job – may find they need a debt management plan to get their finances under control and avoid repossession.

One good piece of news today (August 11th) is a new survey showing the recent tally of repossessions has been "reasonably stable".

The Ministry of Justice figures showed the number of properties taken back by lenders in the fourth quarter of 2010 was two per cent down on the equivalent period of 2009 at 19,329.

However, this was one per cent higher than in the third quarter of last year.

By Joe White
 

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