Inflation 'will push interest rates back up' says National Homebuyers
Even though interest rates were cut in December, they will rise again once the credit crunch eases, an expert has warned.
[UKPRwire, Thu Jan 24 2008] David Kuo, head of personal finance at fool.co.uk, said research by the website of its readers indicated that people believed that inflation was already higher than government figures indicate.
While the effects of the credit crunch had forced the Bank of England to cut interest rates in December, with indications of more to come, in the long term interest rates would have to rise to control inflation, he said.
"We think that the current interest rate is probably not truly representative of what the rates should be," said Mr Kuo.
"So, once the credit crunch is over I think that interest rates will have to go back up again to address the inflation in the UK economy."
Inflation topped three per cent last year but has since steadied at around 2.1 per cent.
Fast property sale expert Julian King adds, "Even if there is a rate cut, many will find that the cut is not passed onto borrowers.
"Banks will have to give themselves a buffer in case of further problems relating to the unstable US market.
"Additionally, those coming off their fixed-rate mortgages will find even a 5.5 per cent rate difficult to manage.
"Homeowners who will experience problems because of the base rate need to consider a quick house sale before their financial situation gets out of control".
Mr King is a director of National Homebuyers, the UK's leading fast property sale firm, guaranteeing to make a formal cash offer to purchase any property in the UK. The company is also a leader for mortgage rescue schemes such as Sell and Rent Back.