Interest rates will increase up to 5%

For twenty months now, those people who have had an SVR, or tracker rate on their mortgage have been happily taking advantage of a really inexpensive loan, because of the low base rate of interest established by the Bank of England.

Still, even though the base rate for loans has been kept at its record low level of only 0.5% for nearly two years, the mortgage holders have been informed by the Bank of England that they should be prepared for the high probability of interest rate rises which will inevitably lead to the overall increase in the cost of their mortgage.

According to the projection of Paul Fisher, MPC member, the base rate of interest will go back to the level of about 5%, which used to be common before the credit crunch.

Additionally, Paul Fisher said that the cost of a home owner loan was extremely low at the moment, and that couldn’t help the UK economy recover, but loan rates would soon increase to a more reasonable level.

However, he assured borrowers that the 5% rise wouldn’t be immediate. The Bank of England will set small interest rate increases over several months, to ease the blow for borrowers and give them time to consult financial experts and loan brokers.

 


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