Should the Government halt interest rate as it rises?
Two prominent national consumer organizations, the HomeOwners Alliance and the National Association of Property Buyers, have jointly urged the government to refrain from implementing yet another interest rate hike this week. Both organizations have emphatically requested the government to avoid raising interest rates for the 15th consecutive time, currently at 5.25%.
There are growing signs that the Monetary Policy Committee (MPC) is contemplating an interest rate increase from 5.25% to 5.5% scheduled for Thursday.
Paula Higgins, CEO of HomeOwners Alliance has described how the rate rises have “devastated homeowners’ carefully laid financial plans” and has called on the Bank of England to “stop this attack on homeowners.”
“While Governor Andrew Bailey has given some hope that we are near the end of the relentless succession of increasing interest rates, the speculation is rates will rise again on Thursday, which will leave millions of homeowners bearing the brunt of the economic policy to battle inflation – yet again.
This needs to stop now. Raising rates from 5.25% to 5.5% would mark the highest level since 2007 and will leave homeowners open to even longer periods of misery.”
The National Association of Property Buyers (NAPB) said things “remain very fragile” in the sector. NAPB’s spokesperson Jonathan Rolande warned:
“There are very, very fragile signs of recovery in the housing market. A small but important September bounce has been helped by some keener pricing on mortgages. Plus, a year after rates began to rise, there is a growing acceptance from buyers that this is ‘the new normal’ so they might as well buy a home now, rather than waiting.
Is it the right time to increase it making it the 15th consecutive rise? I don’t think so. Things are too fragile and this could be a tipping point for many.”
The previous 14 rises have had the desired cooling effect on the economy but have been quite disastrous for many families and landlords without the luxury of a fixed-rate mortgage. Adding to that pain now may well tip many into arrears.”
Higgins also stated that the “uncertainty of the current cycle of interest rate rises is also very damaging,” adding
“Homeowners having to remortgage don’t know whether to act now and fix or hold off. People need to know the situation is stable before they can act.”