First time buyers told to prepare for further rate rises

31-Aug-2007

Yesterday's report from the Bank of England announcing that lenders approved a further 115,000 mortgages in July means that first time buyers and other consumers should prepare for a fresh interest rate rise, Fool.co.uk has said.

The number of approved loans remained at the same level as in June, suggesting that demand has not yet softened despite five interest rate rises in the last 13 months.

With consumer credit, personal loans and credit card borrowing also showing net increases, the Bank may act despite the current global financial troubles, it has been advised.

"Although there are promising signs that the housing market may be cooling, interest rates, which are at a six-year high, have yet to temper consumer spending," commented Fool.co.uk head of personal finance David Kuo.

"Borrowing on credit cards remains stubbornly robust, and demand for personal loans and overdrafts has jumped.

"The signs all point to more interest rate rises, and once again it will be put-upon homeowners who will have to bear the brunt of higher borrowing costs," Mr Kuo added.

The last hike came in July, but this month the Monetary Policy Committee voted 9-0 to hold rates at the current level of 5.75 per cent.

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