Repossession risk unchanged – for now

Those potentially facing repossession if the Bank of England base rate rises soon may have been wondering what the minutes of the latest Monetary Poli…

Those potentially facing repossession if the Bank of England base rate rises soon may have been wondering what the minutes of the latest Monetary Policy Committee (MPC) meeting would bring.

While it was known the base rate had been held, any indication that the nine-member body was closer to a change this month than last – when three voted to raise rates – could be a clear hint of an unstoppable shift towards a hike.

In the event, it now transpires there has been no change at all from February. Mr Sentence again called for a 0.5 per cent hike, while Messrs Weale and Dale supported a 0.25 per cent increase. By contrast, Adam Posen was again the sole advocate of more quantitative easing, calling for another £50 billion of this, while the other six voted for no change.

So with no alteration in the position of a single member, it may now be tempting to imagine a stalemate of a four-way split will persist.

However, those who are struggling with their home loan repayments may be wise to seek a debt management plan or take other action now, for the situation may last no longer than until the latest figures for gross domestic product (GDP) are revealed, after the economy shrank in the last quarter of 2010.

Noting this, Royal London Asset Management economist Ian Kernohan said: “The committee remains very split, with some of those members not yet voting for a rate increase keen to wait to see if the decline in GDP last quarter was truly a one-off, or whether there is more serious underlying weakness in the economy.”

This being the case, next month or May could see a rate rise in response to any signs of a rebound in the first quarter of 2011.

By James Francis

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