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Inflation changes could see mortgage rates increase

15 December 2004
November's inflation figures could mean mortgage rates will rise again.

Yesterday it was announced that inflation had risen above expectations.

Inflation, as measured by the consumer price index (CPI), rose by 0.3 per cent in November.

Chief economist at the Institute of Directors Graeme Leach believes this inflation reading is consistent with another 0.25 per cent interest rate increase in interest rates early next year.

Any rise in interest rates will see mortgage costs increase for an borrowers without a fixed of capped rate mortgage.

However, Mr Leach did say that he did not expect interest rates to keep rising.

"The headline figure looked bad at first sight, but closer examination provides reassurance that inflation remains under control" he said.

To read about how to switch to a fixed rate mortgage, click here.
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