The Bank recently announced a rise in interest rates to 5.25%. This was unexpected at the time, however inflation statistics a couple of days later seemed to entirely justify their decision. CPI inflation rose to an 11 year high of 3%. By historical standards 3% is not too bad, but the Bank of England will be keen to maintain their impressive anti -inflationary credentials and avoid future inflationary pressures. Therefore the prospect for homeowners is not looking too good for 2007. Interest rates may have to rise further to reduce spending sufficiently to prevent inflation exceeding its target.
Full article: Prospect for UK interest Rates 2007