CML comments on rate change

Commenting on today's decision by the Bank of England's MPC to raise interest rates from 5.5% to 5.75%, CML Director General Michael Coogan said:

"Today's rate rise is unsurprising and has been factored in to market expectations. With increasing concern that the Bank of England will not meet their 2% target for inflation, today's rate change will contribute to a gradual slow down in the housing market and help offset growth in other parts of the economy.

"At present four out of five new borrowers are taking out a fixed-rate mortgage and will be protected from the immediate effects of today's rise. But this is the fifth interest rate rise since 2006, and two million borrowers will be coming off a fixed-rate deal in the next 18 months on to higher mortgage payments.

"Inevitably this will leave more households financially stretched. While this may be a necessary evil to get inflation back under control, it does mean that many home-owners will need to adjust their finances to prevent falling behind on their mortgage payments. If in doubt, our advice to borrowers is to discuss potential financial difficulties with their lender at the earliest opportunity."