Interest Rates On Home Loans Hit 7-Year High

Mon, 14 Jan 2008

Interest rates on home loans in the UK have reached a 7 year high, the Bank of England revealed last week.

The rise comes at a time when retailers are admitting to poor Christmas sales and taxes continue to increase, resulting in hard times for the British public.

Mortgage rates have been steadily rising over the past few months from 5.94 per cent on September to 6.02 per cent on November, which translates into homeowners paying £135 extra each month compared to last year.

Experts fear this increase may signal a surge in home repossessions, imitating the sub-prime crisis that hit US markets last year.

December's interest rate experienced a slight drop from to 5.75 per cent to 5.5 per cent.

Economist David Owen said the rising home interest rates are proof that the credit crunch is beginning to affect the average Brit.

Speaking to the Telegraph, Owen said: "It is particularly striking that the average mortgage rate available to households unable to secure credit because banks have become much more unwilling to lend."

Prime Minister Gordon Brown has warned that the UK economy faces a decisive 2008 and is expecting any negative effects to be reflected by the public’s votes.
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