Base rate rise 'would not increase repossessions'

By Sarah Engle, Thu 17 Feb 2011 - Published in Banking

The number of properties being repossessed would not be significantly affected by an increase in the base interest rate, it has been claimed.

Ray Boulger, senior technical manager at independent mortgage adviser John Charcol, said that any rise in the base rate by the Bank of England's Monetary Policy Committee is likely to amount to just 25 basis points.

The commentator added that this will only push up the interest applied to mortgages by around 0.5 per cent, which he believes will not make a "big difference" to borrowers' ability to meet their repayments.

Mr Boulger commented: "The number of people who are in arrears has been falling and that is clearly because the low interest rates let some people who had been in arrears actually climb out of arrears."

Earlier this week, mortgage outsourcing organisation HML predicted that the number of repossessions is likely to fall in the first six months of 2011, but will then rise over the second half of the year.

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