25
Aug
Homebuyers 'should be aware of rising payments'
Homebuyers looking to purchase a house for sale in the UK should be
more aware that interest rates could quickly rise once the base
rate starts increasing.
This is according to Paula John, editor at Your Mortgage, who
stated that the Bank of England base rate of 0.5 per cent is
"incredibly low" and urged borrowers to not get used to it.
She said the UK is going through "extremely unusual financial
circumstances" at the moment and when the economy begins to
recover, the base rate will go up, which will affect the interest
rates borrowers pay back on their home loans.
Ms John's comments come after Moneyfacts.co.uk's spokeswoman
Michelle Slade estimated that interest rates could increase to
eight per cent by 2012.
Andrew Lilico, chief economist at Policy Exchange, repeated this
prediction, adding that rates were as high as 7.5 per cent in
1998.
He said this could result in many people "defaulting on mortgages",
which he stated is what the industry is trying to avoid.