Another interest rate rise ‘likely’

Despite the Bank of England deciding to increase interest rates only last week, another rise to the interest rate is ‘likely’ to take place, it has been suggested.

According to Nationwide chief executive Graham Beale, the base rate could go beyond the 5.5 per cent barrier which could put further pressure on Britons’ ability to make repayments on personal loans and other forms of borrowing, reports the Evening Standard.

He told the publication: "Most of the market has already factored in another 25 basis points [quarter of a percentage point] rise in interest rates within the next few months."

Mr Beale added that despite four interest rate rises taking place over the past 12 months, average property prices are expected to increase by five to eight per cent this year.

However, homes in London are set to rise by at least ten per cent which could squeeze consumers in the capital’s affordability to make home and secured loan repayments.

Meanwhile, the building society revealed that residential lending rose by 78 per cent over the course of 2006 to £11.2 billion.

Yesterday, a study by Lloyds TSB indicated that the majority of borrowers were ready for the effect May’s interest rate increase could have on their loan repayments.

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