CML reacts to rate rise

11 Jan 07

Reacting to today's rise in interest rates to 5.25%, CML Director General Michael Coogan said:

"The timing of this rise is sooner than we expected, although we have been forecasting higher rates. Inflationary pressure appears to be more pronounced, not least because of the prospect of higher wage growth, and we would not be surprised if rates now ended 2007 at 5.5% rather than the 5.25% we forecast back in December.
"Mortgage borrowers who are concerned about the impact on affordability can still consider a wide range of attractive fixed-rate deals. Anyone borrowing on a variable-rate basis should factor in an expectation that rates have further to rise."

Notes to editors

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11.6 million mortgages in the UK, with loans worth over £1 trillion.

2. A rough estimate of how 0.25% interest rate rise would affect standard variable mortgage payments on repayment and interest only mortgages is attached.