Interest rate rise ‘could hurt homeowners’

Homeowners are set to struggle following the Bank of England’s decision to increase interest rates to 5.5 per cent, it has been suggested.

According to the Building Societies Association (BSA), the fourth rise to the base rate since August 2006 will could cause an increase in monthly secured loan costs for those on variable rate mortgages.

Director general for the BSA Adrian Coles said: "For some, especially people who have also taken out personal loans or credit cards, this could mean a problem paying the mortgage."

Mr Coles claimed that those concerned about an inability to make repayments should contact their mortgage supplier or loan provider.

The BSA also warned that following the interest rate rise, growth in the property sector is set to be further dampened.

Earlier this year, the British Bankers’ Association claimed that demand for housing could fall due to predicted base rate increases.

Director of statistics David Dooks claimed that as a result of this, more borrowers are looking to take out a fixed-rate secured loan.

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