Poverty concern over rates rise

Published on BBC News 10 May 2007:

2 excerpts: Unions and employers’ organisations said they feared the rise would damage business and leave many homeowners struggling to pay their bills.

Meanwhile, housing charity Shelter Scotland warned it could “push more Scots towards poverty.”

The Royal Bank of Scotland said it believed interest rates had now peaked.

The Monetary Policy Committee decision to increase interest rates by a quarter of a percentage point to 5.5% took the cost of borrowing to its highest level since 2001 …

… Archie Stoddart, director of Shelter Scotland, said he believed increased rates made housing unaffordable for many families.

He said: “We must see a commitment from our newly elected politicians to find ways to give people real choices about how and where they live.

“Housing is central to our nation’s health, wellbeing and economic future.”

Royal Bank of Scotland economist Ross Walker said he was looking for rates to peak at 5.5%, but would review his forecast in the wake of next week’s inflation report.

He added: “CPI inflation has almost certainly peaked and there are legitimate grounds for expecting a moderation in consumer demand in the second half of the year.”

Ed Monaghan, managing director of the Glasgow-based housebuilder Mactaggart & Mickel, said he expected interest rates to fall again in the second half of the year.

“In terms of its impact on the new homes sector I do not believe this rise on its own will impact significantly on sales given the current demand in the sector,” he said. (full text).

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