25 Aug

Homebuyers 'should be aware of rising payments'

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.ADNFCR-1222-ID-800039533-ADNFCR

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