Millions face mortgage payment hike with first interest rate rise in a decade expected TODAY
Experts claim that chances that rates will be hiked is 90%
MILLIONS face the possibility of higher mortgage repayments if interest rates go up for the first time in a decade today.
The Bank of England’s Monetary Policy Committee meets today — and experts say there is a 90 per cent chance rates will rise from 0.25 to 0.5 per cent.
It would be the first interest rate increase since July 2007 — and would mark a new era in monetary policy.
Bank governor Mark Carney had suggested that it may be “appropriate” to increase interest rates to cool rising inflation.
However, in the past he has been dubbed an “unreliable boyfriend” for changing his mind on monetary policy.
Laith Khalaf, senior analyst at investment firm Hargreaves Lansdown, said: “Markets are now pricing in a 90 per cent chance of a UK interest rate rise today.”
And Kathleen Brooks, research director at trading firm City Index, said if the Bank of England does not increase the rate, its credibility could be on the line.
But she said the nine committee members also have a “conflict of objectives, with compelling reasons to both hike rates and remain on hold”.
She said that reasons to remain on hold include risks to economic growth, including low wages.
And she said there could be an impact on mortgage-paying households, all having a knock-on effect on consumer spending.
Reasons to increase the rate include inflation and record employment.
But experts say that even if rates continue rising, they would still peak at just two per cent in 2021.
Rise of the Zombie Firms
A QUARTER of a million “zombie” firms may finally be killed off if interest rates rise as expected.
The last year has seen a 27 per cent increase in the number of firms in “significant financial distress” — a total of 448,011.
Of those, 250,000 are described as zombie firms, with only enough cash to service the interest on their loans but not the debt itself.
Insolvency experts Begbies Traynor said the firms have survived only because of low interest rates.
And Begbies’ latest “red flag” report has said if rates do go up “many of these struggling companies will not have the reserves available to survive”.