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Rate rise will hurt non-fixed rate borrowers, says Hamptons

Hamptons Mortgages has warned that the interest rate rise will hurt homeowners on tight budgets and those that arent on fixed rates.

Jonathan Cornell, technical director at Hamptons Mortgages, says: With house prices growing by around 10% in 2006 and predicted to increase by as much as 8% this year we knew that Monetary Policy Committee was likely to increase the base rate but I am surprised that it has done it so soon after Novembers increase and so close to Christmas.

He warns that for households already on a tight budget the rise will continue to put a strain on their finances.

However, he adds that with bumper City bonuses and demand for property exceeding supply especially in London and the South-East, and consumer price inflation at its highest level for a decade, the MPC needed to yank the reigns to try to slow down houseprice growth and inflation.

Cornell says: Whilst each of the three base rate increases we have had since August last year has brought a relatively small increase to the cost of a mortgage, the combined effect of all three will undoubted start to hurt homeowners who arent on fixed rates.

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