Mortgage borrowers of Britain are gripping their seats as three out of the nine of the interest rate- setting committee of Bank of England is due to release their votes for a rate rise this coming Thursday.
Confirmed hawks Martin Weale and Ian McCafferty said that they are expecting and ready to know that borrowing costs will increase. The two also voted for last year's second quarter interest rate rise but later changed their minds when inflation rate dove down to zero on the first quarter this year.
According to David Miles, an independent monetary policy committee member, interest rates should be brought back to normal from 0.5%. He also said that "The time to start normalisation is soon; that is not something to shrink from." Miles' term will end soon and he'll be replaced by Gertjan Vlieghe, a hedge fund economist, in September.
Recent studies by Hampton, a real estate agency, suggests that increase in interest rates can cause an addition of £20 a month to the UK mortgage in average. Also, since houses differ in prices, more expensive homes in London can have mortgages as high as £52 more in a month.
Usually, announcing of interest rate decision, publishing the minutes of the meeting and presenting the latest quarterly forecasts for economic growth and inflation are done in a different occasion but according to the bank governor, Mark Carney, he wants to "end the 'drip feed' of news from Threadneedle Street" so they decided to release all three this coming Thursday.
Most economists see the slashing of interest rate to 0.5% last March 2009 as an emergency measure for the effect of global financial crisis to the UK's economy and that this measure will soon be lifted. However, they also worry that this ultra- low rates are encouraging the people to take on more debt and changing the markets.