Borrowers Face Further Base Rate Rises
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The Bank of England will raise the base rate again before the end of 2007.
Of more concern for borrowers, the Bank's Monetary Policy Committee may actually choose to increase the rate two times to try to bring inflation under control.
The Quarterly Inflation Report suggested that if interest rates stayed at their current level, inflation will not fall to the two per cent target over the next two years.It also suggested that even if the base rate was at six per cent, inflation would not come down enough.
Mortgage holders can expect a rise to 6.25 per cent, the highest per cent since December 1998. Vince Cable (Liberal Democrats) expressed his concerns that many will not be able to cope.
"It seems that the Bank of England will have no choice but to raise interest rates," said the shadow chancellor.
"The position of heavily borrowed families with large mortgage obligations is becoming seriously grim.
"It is difficult to foresee anything other than a continuing rise in the number of people facing repossession and personal bankruptcy," he added.
The Council of Mortgage Lenders have reported a year-on-year repossessions increase of 30 per cent.
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