Legal News
Rise in interest rates will be gentle, says Bank of England (16 February 2015)
Date: 16/02/2015
Deputy Governor of the Bank of England Sir Jon Cunliffe has said homeowners should not be fearful that any future interest rate rise would put them under financial pressure, as the base rate is likely to undergo a gentle rise rather than being hiked to excessive levels.
Sir Jon is in charge of financial stability at the Bank – there has been ongoing speculation about when interest rates would start to rise, which would in turn lead to a rise in mortgage repayment costs.
“One shouldn’t get too hung up about the exact date on which interest rates will go up,” Sir Jon said on Friday (13/02/15).
“The point is, when they do go up it will be gentle – and they won’t go back to the sort of levels we saw in previous years.”
There has been widespread concern that a sudden hike in the Bank’s base rate would send mortgage repayments spiralling and cause a property crash similar to the property bubble in the late 1980s and early 1990s, when many new homeowners fell into negative equity – including homeowners who had bought under the Thatcher government’s Right to Buy scheme.
Sir Jon added that the Bank would not need to cut loan rates because of the effect of oil prices falling and inflation.
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