The Liberal Democrats have warned that any future rate rises will lead to a national housing crisis.
Vince Cable MP, shadow chancellor for the Liberal Democrats, says: “Many families are now struggling to meet interest payments as house prices and interest rates continue to rise. The ominous warning today from Mervyn King suggests there is at least one more rise in interest rates to come.
”Gordon Brown has been extraordinarily lucky so far, but a combination of an economic slowdown and higher interest rates could spell disaster for large numbers of heavily indebted families.”
Cable warns that the Bank of England and the mortgage lenders are playing a dangerous game when it comes to pushing rates and fees.
He says: “If interest rates rise further, many home owners will simply not be able to pay. The figures over the last two years show that although we are not yet at the crisis levels of the early 1990s, the number of repossessions and repossession orders is soaring.
“A generation of young people are now finding it impossible to get onto the housing ladder except by borrowing at levels which are ludicrous and dangerous. Unfortunately some mortgage lenders are inviting disaster by doing this.”