Interest rate hope for mortgage holders

Interest rates could be set for moderate rises in the future, according to new figures.

14:11 13 September 2004

Interest rates could be set for moderate rises in the future, according to new figures.

Economic expansion is set to slow markedly in the main industrial countries if current trends continue.

And with inflation also remaining low, it is hoped that interest rates in both the UK and the US will see only moderate rises in the future.

Since November mortgage holders have been hit hard by rate rises, five separate increases have seen the underlying rate of borrowing in the UK leap from 3.5 per cent to 4.75 per cent in less than a year.

But recently commentators have been suggesting that the rate hikes could be coming to an end - with many economists predicting that rates will not rise beyond five per cent and that there will be no further rises this year.

The Organisation for Economic Co-operation and Development's (OECD) Composite Leading Indicators for the UK show a 0.8 point decrease during July, the sharpest fall of any leading industrial nation.

The figures come following a warning by Gordon Brown to European finance ministers that poor eurozone growth could be a potential cause of instability in the world economy.

The chancellor told the Financial Times last week that there needed to be more "urgency" in tackling economic reform within the EU.

Meanwhile, the world's fastest growing major economy refuses to conform to international trends. Figures in China show industrial production grew by 15.9 per cent in the year to July.