Mortgages Set To Rise In U.K. With bank Rate At 4.75%

"Millions of homeowners are preparing to pay higher mortgage bills afterthe Bank of England unexpectedly ordered a hike in interest rates", according to Philip Thornton of The Economist.

It said strong economic growth combined with rising inflation and arecent surge in house prices and mortgage lending had put its inflationtarget under threat. The rise in the base rate from 4.5 to 4.75 percent will add to the financial burden faced by households alreadystruggling to meet soaring utility and council tax bills.

The London stock market fell almost 100 points and the value of thepound soared on fears that this was only the first of several increasesin borrowing costs. The Bank blamed rising oil prices for pushinginflation well above the 2 per cent target. "Inflation is likely toremain above target for a while," it warned.

Mortgage lenders are certain to follow suit. Nationwide buildingsociety, Halifax, Abbey National and Northern Rock said they werereviewing their rates.

Housing industry groups condemned the move. "The market has beenhealthy and steady [so] this week's rate hike is totally unnecessary,"said David Newnes of Your Move estate agents.

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