Homeowners adversely affected by interest rate rise

Homeowners will be negatively affected by yesterday''s unexpected interest rate rise to 5.25 per cent, according to one property expert.

The Bank of England''s decision to raise the interest rate is sure to push up the price of mortgages and may mean that many people struggle to meet their mortgage repayments, according to the Council of Mortgage Lenders (CML).

Bernard Clarke, spokesperson for the CML, said: "Everyone will be affected.

"The majority of those who will be affected will have, over a period of time, worked out how to adjust their borrowing costs in relation to the rate rise."

However Mr Clarke did add that the increase is modest and will add £25 per month to the cost of a £150,000 mortgage and thus he believes that it is highly unlikely that people will downgrade to cheaper homes in 2007.

Neither will it affect the buoyant buy-to-let market, said Mr Clarke, because landlords can raise their rents and make their margins tighter in order to cover costs.


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