Mortgage costs 'may rise' with inflation

Date:Wednesday 20th January 2010
Author: Max Freedman

The cost of monthly mortgage repayments may increase as inflation has risen by one per cent, it has been predicted.

While many homeowners are concerned that the low rates on interest that they have enjoyed in recent times may be over, economists are cautious about any increase in rates taking place, the Daily Express has reported.

A rise in the Consumer Price Index to 2.9 per cent is likely to mean that many prices will be affected by this surge in inflation.

But it could be important for the Bank of England officials to keep mortgage rates low to continue the UK's slow recovery out of recession.

It is feared that an increase in the base rate will see the cost of many goods, as well as mortgage repayment prices, rising rapidly.

However, several institutions have been cutting their rates lately, such as Coventry Building Society, which has taken 0.54 per cent off some of its products, as well as cutting the amount needed for a deposit.