Interest rates could rise early next year and at a much faster rate than previously seen, according to one economist at a City fund manager.
Simon Ward of Henderson New Star claims that the Bank of England base rate of interest, currently at an all-time low of 0.5%, will increase early next year and that the rate of increase is likely to be higher than normal, with inflation likely to increase quickly following the government’s quantitative easing strategy.
That means bad news for homeowners, as those with variable or tracker mortgages will see their mortgage repayments increase but savers should see a better return on their investments.
The Bank of England base rate has been brought down to record lows during the current recession in an effort by the bank to encourage spending and stimulate the economy. A