Consumers ‘respond’ to interest rate increase

Consumers are beginning to feel the impact of the four interest rate rises which have taken place over the past 12 months, an industry expert has suggested.

Stephen Leonard, director of mortgages at Alliance & Leicester, pointed to figures released by the Council of Mortgage Lenders (CML) earlier this week and claimed that as interest rates now stand at 5.5 per cent borrowers could find their ability to make secured and home loan repayments squeezed.

He said: "Borrowers are now responding to the effect of a one per cent base rate rise, in the past year, with year-on-year lending up 18 per cent, but month-on-month lending down by nine per cent in April compared with March."

Mr Leonard added that as interest rates start "to impact on the level of mortgage lending" the base rate may now have reached "the top of the curve".

According to the CML, some £28.8 billion was issued via Home Loans over the course of April, down from the £31.7 billion witnessed in March.

However, this amount was still the highest ever recorded during the month.

Interfinancial providing you with breaking homeowners loans news.