Consumer apathy ahead of MPC decision
Interest rate rise speculation sees homeowners holding breath for MPC decision.
10:25 05 June 2004
With growing speculation about further interest rises, many homeowners are holding their breath for the MPC's June 10th decision.
According to Direct Line, more UK homeowners than ever (77 per cent) are currently expecting that rates will rise, in contrast with a number of analysts who feel the same (67 per cent). But many are failing to act.
RBS Group chief economist, Jeremy Peat said: "It is extremely difficult to predict the outcome of June's Monetary Policy Committee meeting."
He pointed out however: "There is a distinct possibility that they will raise interest rates by a further 0.25 per cent, but at the same time, a decision to leave rates on hold at 4.25 per cent this month would not come as a big surprise."
Yet, whatever the decision this week, Mr Peat is clear on one thing: "The overwhelming probability is that interest rates are set to rise further during the course of this year - heading to 4.75 per cent or 5 per cent by year-end."
Yet it would seem that while many homeowners are concerned, they are doing nothing at present about the possibility of rises.
Direct Line found that 44 per cent don't plan to do anything about the situation (as opposed to 37 per cent last month) and have not considered moving their mortgage.
Direct Line says that for those wishing to move their mortgage fixed rate deals are by far the most popular option.