Economy

Homeowners facing first interest rate rise in 10 years

Homeowners facing first interest rate rise in 10 years”

Households racked up unsecured debts of over £204.2billion in credit cards, vehicle finance, overdrafts and other loans as of September, latest data from the Bank of England reveal.

However, with the rise, it is within touching distance of its peak of £208.3billion in September 2008, when the financial crisis was in full flow.

Credit card lending expanded by 9.2 per cent on the same month a year earlier, up from the rate of 8.9 per cent in August and the fastest since April.

Howard Archer, chief economic advisor to the EY ITEM Club, said that September's second successive dip in mortgage approvals suggested it was unlikely there would be an upturn in housing market activity in the near future.

"The latest credit conditions survey did at least indicate that banks are becoming more cautious in their behaviour by making less unsecured credit available to consumers and tightening lending standards".

London:The Bank of England (BOE) may increase interest rates this week for the first time in more than a decade, but that won't be enough to buoy the pound, according to strategists. "There is a reasonable enough chance they don't raise rates, we'll have to see what comes out from the statement the bank puts out". "While any increase in interest rates would be small and mortgage rates would still be at historically very low levels, the fact that it would be the first rise in interest rates since 2007 could have a significant effect on housing market psychology", said Archer.

But there are concerns that consequent increases could push the cost of servicing debts higher and tip people who have taken on too much debt into serious financial problems.

'Millions of people will have never experienced an interest rate rise.

Growth in overall consumer lending, of which credit cards account for just over a third, fell slightly to 9.9 per cent over the year to September, the Bank said today.

The Bank's latest data also showed that there were 66,232 new mortgages for house purchases in September, down from the 67,232 in the previous month and below the 66,867 average of the previous six months, reinforcing the picture of a slowing residential property market in the wake of the Brexit vote in 2016.



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