Two thirds expect cost of borrowing increases

Two thirds of consumers say that the cost of borrowing will increase over the next year a Lloyds TSB study has revealed, the highest figure since April 2005.

Just seven per cent of people quizzed say that they expect interest rates to fall over that time, said the Lloyds TSB Consumer Barometer.

The Bank of England voted to leave interest rates unchanged at their most recent meeting last week, the tenth consecutive month that rates have remained static.

A consensus among analysts and economists has been shifting towards expectations of a rate rise by the end of the year at the latest, however.

“This latest survey indicates that households across the UK are bracing themselves for the inevitability that the next rate move will be a rise,” said Trevor Williams of Lloyds TSB.

“Although the MPC kept rates on hold last week, a hawkish quarterly Bank of England report in May and the first vote by an MPC member for a rate rise since May 2005 hinted at the first nudge towards a 25 base point rate rise in the final quarter of the year.”

Best rate loans, credit cards and mortgages have all enjoyed a sustained period of relatively low pricing that would be jeopardised by an upward rate move.

© Adfero Ltd

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