8 Sep

Homeowners with variable rate loans 'could see big rise'

Homeowners with variable rate loans 'could see big rise'

Homebuyers looking for a house for sale in the UK have been advised against taking out a tracker mortgage after one expert suggested there could be a big rise in interest rates.

According to Riach Independent Financial Advisers Bob Riach, there could be a steep increase in repayments "within a year or two".

His comments come just a day before the Monetary Policy Committee announce its decision whether to hike up the Bank of England base rate from 0.5 per cent.

Mr Riach recognised that this is the lowest bank rate yet and repayments for homeowners with variable rate loans have been reduced significantly, "things will not stay this way forever".

He predicted that rates could start going up again "before the end of the year" - estimating that the base rate will rise to one per cent before the start of 2011.

Principality Building Society recently launched its new mortgage product which allows homeowners to switch between a tracker and fixed-rate mortgage, enabling them to avoid the dilemma of rising interest rates. ADNFCR-1222-ID-800057301-ADNFCR

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