Repossessions will not increase with interest rates, expert says

Posted: 17 Feb 2011 11:35:21 GMT

The Bank of England may increase rates this year, but one expert has argued it will not necessarily lead to repossessions increasing.

An increase in repossessions is unlikely to be seen if interest rates are raised this year.

That is the suggestion of Ray Boulger, senior technical manager at John Charcol, who observed the number of people in arrears on their mortgages has been falling as it has been easier for homeowners to make repayments.

Even if the Bank of England chooses to increase the base rate, he argued it will not have a significant effect on this trend.

However, Mr Boulger added a rise is "nothing like as much of the certainty that most economists seem to be talking about", noting high levels of inflation are not enough to guarantee the change.

"The fact that the economy is slipping backwards quite nastily is a very strong reason to not raise interest rates," he said.

Earlier this week, HML predicted a decline in repossessions in the first half of 2011, although this is expected to be followed by an increase in the final six months.
 

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