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09 July 2007
Homeowners in the UK have had a hard time over the past year. For those on variable rate mortgages payments have shot up in line with interest rate rises.
The Interest rate has been hiked up five times over the past year, with quarter point rises in August and November of 2006 and further rises in January, May, and July 2007. This has taken the interest rate up to 5.75 percent, the highest it has been for six years.
It is not just homeowners that are already on variable rate mortgages that are suffering - those on fixed rate mortgages that are due to expire will soon feel the effects of the five interest rate rises, and many will find their mortgage repayments rising by hundreds of pounds each month.
Many officials and debt charities are concerned that this could tip some households over the edge financially, and the UK could see a rise in bad debt and repossessions.
Following last week's interest rate rise of 0.25 percent, the Monetary Policy Committee has warned that inflation in the UK is continuing to pile on the pressure with regards to the stability of the interest rate, and for many analysts this means that further interest rate rises are on the way.
In a report the MPC stated: "most indicators of pricing pressure remain elevated". According to one bank official the report from the MPC is a sure sign that there are more rate rises to come this year.
He stated: "The content of the statement is very similar to what was published in May when they last raised rates. The markets will take this as a sign that there's probably more to come."
Debt charities and counselling services have also expressed concern over the effect that further interest rate rises will have on consumers in the UK.
One charity spokesperson stated: "We're seeing more and more people coming in for help with mortgage or secured loan arrears. People are really stretching themselves to the limit to buy a house and take on a mortgage. A small increase in interest rates could just tip them over the edge."
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