Mortgages up as interest rate rises again

The Bank of England has raised the interest rate to 5.5 per cent today which is an increase of 0.25 per cent.

"This rate change was a certainty even before it happened," said the Council of Mortgage Lenders( CML), echoing the general consensus that this increase was widely expected as inflation was higher than expected throughout March.

This means people may pay more on their mortgages and is designed to counteract lower energy prices and weaker import price inflation.

Michael Coogan, from the CML, said: "With four out of five recent borrowers choosing fixed-rate mortgages, the effect of the change will be dampened to some extent - although around half of those with a mortgage are on a variable rate and will see their payments change."

The interest rate is now at a six-year high although the bank's governor Mervyn Kind has promised that inflation should decrease to a two per cent target from the current 3.1 per cent.




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