Britons ‘Looking To Further Interest Rate Increases’
Keywords: secured, loans, personal, finance, credit, cards, consolidation, debt, interest, rates
The majority of Britons are expecting interest rates to rise, a new study indicates.
In the Consumer Barometer from Lloyds TSB Corporate Markets, some 79 per cent of respondents believe that the Bank of England’s monetary policy committee (MPC) is set to push the base rate beyond the current mark of 5.75 per cent within the next 12 months. The latest announcement compares to 80 per cent of consumers questioned last month who believed interest rates would rise over the course of the year. Meanwhile, five per cent of those surveyed believe that the MPC will have lowered rates by this time next year - the same figure as that noted in the June study.
Commenting on the data, chief economist for Lloyds TSB Corporate Markets Trevor Williams suggested that the impact of recent interest rate rises has led more Britons into organising their finances to prepare for the impact of higher monthly secured loan costs. He said: “The interest rate hike in July did little to reassure consumers there was an end in sight to the increases and they widely seem to agree with the prevailing view in financial markets that at least one more hike is on the horizon. This is probably a good thing in that it suggests consumers are preparing for higher mortgage payments”.
Mr Williams added: “The growing uncertainty consumers feel about the labour market should appear in weaker confidence indices and a slowdown in spending in the coming months. The Bank of England will be watching this data particularly closely as it could determine whether they will need to raise interest rates again this year”.
Figures from the financial services firm also showed that despite a fall in the rate of inflation on the consumer price index to 2.4 per cent, more Britons believe pressure on their personal finances is set to increase. In this month’s survey, Lloyds TSB indicated that 77 per cent of respondents think that prices will rise rather than fall during the next 12 months - up from the 74 per cent noted in June.
Meanwhile, members of the public were said also to be less optimistic about their employment prospects due to the impact of MPC increases. Some 24 per cent of those surveyed claimed they felt less secure about their job now than they did 12 months ago. Overall, 37 per cent of Britons believed general employment prospects are worse - a shortfall of 20 per cent from research carried out this time last year.
Earlier this month, Peter Spencer, chief economic adviser for the Ernst & Young Item Club, warned Britons that they will “simply have to learn” to curb their spending as interest rates are set to increase before the end of the year. His comments come after a survey of leading financial analysts carried out by the Independent on Sunday suggested that the MPC will hike the base rate to six per cent, with a “significant number” of economists believing the committee could increase this to beyond 6.25 per cent.
Abbi Rouse writes for All About Loans. Visist us today to apply for secured loans, personal loans, and debt consolidation loans. Visit today www.allaboutloans.co.uk
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