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Interest rate increases

Interest rates are likely to start creeping up. How long do you think it will take before they reach 3 to 3.5% levels?

Asked on Mar 17 2011, Home Finance in London | Report content

Answers (1)

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  • This isn’t an easy question to answer as there are so many different factors influencing the decision of the MPC each month. The general view from the market was that rate increases would begin in May/June and increase gradually over a 12 month period to reach somewhere in the region of 5 percent by June 2012. However as these predictions were made before the Japan earthquake and the escalation of the situation in Libya (and resultant spike in the oil price) it is likely that these predictions will need to be revised once the full economic consequences become clear. A good way to get a rough gauge of where the banks believe interest rates will go is to take a look at the rates being offered for 3 and 5 year fixed rates.

    Answered on Mar 22 2011, Report content

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