Jonathan Smith, Chief Broker at Manchester Mortgage Advisers, has said.
As utility costs continue to ride sharpley such as British Gas's record hike last week. The Monetary Policy Committee (MPC) are forced into a situation where they must try and tackle inflation which is currently running at 3.8% which is nearly double its 2% target and despite a mounting recession risk.
Many experts predict rates will hold at 5% as recession looms, howvever an MPC member requested the rate be increased at July's meeting to tackle inflation head on. The MPC was split on their decision at their last meeting, but with this new information available, a signifcant majority within the MPC may emerge with their preffered decison to raise the Bank of England base rate.
House prices are falling at a record rate, as the credit crunch bites further into the flagging property market. To compound issues, borrowers are finding it tough to secure competative new mortgages as house valuations are coming back low.
According to the Nationwide, the average UK home lost 8.1% of its value during the past year, the biggest annual drop since its monthly house price index was launched in 1991.
Mortgages approved for people buying a house diving by nearly 70% to 36,000 in June according to the Bank of England.
Consumer confidence is dwindling as they to feel the pain of the credit crunch. This reduced spending behaviour is beginning to feed through to the high street as retail sales volumes continue to plunge. Official data showed, the biggest slump since records began in January 1986.
