While many households have saved a fortune on their mortgage due to low interest rates in the last few years, things may be about to change.
David Miles, a member of the central bank’s Monetary Policy Committee (MPC), warned borrowers and lenders to prepare for a day when rates start to increase.
“Interest rates will not remain at this level for many years to come,” he told Bloomberg.
“They need to think very carefully what’s going to happen when the cost of that mortgage moves up.”
He dismissed fears that the housing market was overheating and said the Bank of England would only put rates up to prevent a new property bubble from occurring if other measures did not work first.
The Bank’s governor Mark Carney recently hinted interest rates could go up at some point towards the beginning of next year. However, any increase would be gradual and limited.
Mr Carney pledged rates would not rise until unemployment figures fell below seven per cent. The figure has been decreasing as of late and currently stands at 7.1 per cent.
