CML warns of more base rate rises soon

Further Bank of England base rate rises are on the cards after last week’s 0.25% rise to 5%, the Council of Mortgage Lenders is warningMichael Coogan, director-general of the CML, says the decision to increase rates should have come as a surprise to nobody.

He says: “This could mark the start of a cooling off in the housing market as we approach the new year, but that is not necessarily a bad thing. This year has seen record levels of mortgage lending almost on a monthly basis, and modest increases in mortgage costs will help to maintain a sustainable environment.

“But borrowers should be warned that financial markets are expecting yet another rate rise by next spring and now is the time to take action to protect themselves.”

However, the National Association of Estate Agents has pleaded with the BoE to hold back any further rises.

Peter Bolton King, chief executive of the NAEA, says that while the residential market has performed well in 2006, not all areas are the same. While London and the South-East continue to perform well, he points out that some areas are slowing.

He says: “A further rate rise could have a detrimental effect on areas that are already looking slightly flat.”