Increased UK Interest Rates would Mean More UK Repossessions

Wed, 06 Jul 2011

An international banking group is suggesting that the UK ought to raise interest rates .

The annual report of the Bank for International Settlements has claimed that the monetary policy which has been followed by central bankers throughout the world, including the 0.5 per cent UK base rate since March 2009, has proved to be counterproductive.

The organisation asserts that, "Addressing over-indebtedness, private as well as public, is the key to building a solid foundation for high, balanced real growth and a stable financial system."

This means that private savings need to be driven up and considerable action needs to be taken to lower deficits in countries at the crux of this crisis.

The report claims that low interest rates are not enabling that to happen as they "delay" the adjustments which individual households as well as banks have to make.

Should such an argument take precedence, there may be an increase in repossessions; a higher base rate would mean more costly mortgage payments and make it more difficult for those struggling financially now to meet their future payments.

The last Bank of England Monetary Policy Committee (MPC) meeting did not opt for an increase in rates.

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