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August 1, 2007

UK consumers resigned to further base rate rises

by Gill Montia

Story link: UK consumers resigned to further base rate rises

According to the latest findings of the Lloyds TSB’s consumer barometer, the majority of UK consumers will not be surprised by further rate rises this year.

The barometer shows 79% of respondents predicting that the Bank of England will increase the base rate above its current level of 5.75% in the near future.

This group of respondents also believes that higher rates will still be in place twelve months from now. Only five per cent of those surveyed predicted that interest rates will be lower in a year’s time.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, sees the survey’s finding as evidence of the fact that mortgage borrowers are taking a longer term view of their prospects and preparing in advance.

However, the results could be interpreted as reflective of a level of pessimism among consumers.

This would match other findings showing a decrease in the number of people who believe that their job prospects are better, rather than worse.

As the same time, Hometrac, the property valuation portal, has evidence to show that interest rate rises are having a dampening effect on the UK property market.

The average price of a property across England and Wales increased just 0.1 per cent in July.

 

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