Research shows 'response' to interest rate rises

07-Mar-2007

New research shows that consumers are responding to the Bank of England's recent interest rate increases, which may be of interest to first time buyers concerned over future rises.

According to data released by Nationwide Building Society, although consumer confidence - which may include the feelings of would-be first time buyers - rose to 85 points last month, it remains nine points below the level recorded before the recent rises.

"The Nationwide Consumer Confidence Index seems to be showing that consumers are responding to the three increases in interest rates," said Fionnuala Earley, chief economist for Nationwide.

"All of the indices are well below the levels recorded before the first rise in rates. Consumer sentiment remains fairly downbeat," she added.

Indeed, according to the results of Nationwide's monetary policy committee forecast, although a majority are predicting that interest rates will be held tomorrow (60 per cent), expectations remain divided, with 40 per cent predicting a further rise.

To find out about the different ways of financing a first home, see our section ‘Affording Your First Home’.

In related economic news, a recent forecast by the International Monetary Fund predicted growth of 2.9 per cent for the UK in 2007.

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