Mortgage rates set to rise?

Posted: 19 Jan 2011 12:29:43 GMT

Interest rates could increase after a sharp rise in the CPI rate of inflation.

Mortgage customers could soon see the cost of borrowing increase, as an expert has suggested interest rise rises may be imminent.

Andrew Hagger of Moneynet.co.uk was commenting after the consumer prices index (CPI) rate of inflation was released, with the December figure standing at 3.7 per cent - up from 3.3 per cent the previous month.

Significant drivers included rising fuel and food prices and Mr Hagger observed a basic rate tax payer needs to earn 4.625 per cent gross on savings to maintain spending power, something he argued will not be achievable for most.

Many mortgage customers have been enjoying "far lower demands on their budgets" because of the low-interest rate environment, but with the expert noting inflation is unlikely to ease in the near future, increases may be seen.

"With swap rates starting to rise and with it some fixed mortgage rates, perhaps the tide is starting to turn," Mr Hagger remarked.
 

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