Homeowners need to be ready for an increase in interest rates, a member of the body which sets them warned today.
Martin Weale said people should be aware that the current low rates enjoyed by mortgage holders are not a “normal state”. The member of the Bank of England’s Monetary Policy Committee also said that a rise is “not so far off”.
Increasing employment has sparked speculation that the committee will recommend an increase sooner rather than later. But fears have been raised that some home-owners have not planned for the rise and may find themselves unable to afford mortgage payments.
The BoE has repeatedly said that when rates rise they will do so gradually, but Mr Weale said that if that is the case then the increases should start sooner.
Speaking to the Financial Times he said: “We can wait a bit longer. How long that will be I’m not sure, but the best judgment I can have is that it’s not so urgent it needs doing now.”
The BoE has kept interest rates at a record low of 0.5 per cent since 2009. But minutes of the MPC’s last meeting said some members thought the decision to hold rates was becoming “more balanced”.
Mr Weale added: “I can’t say when [rates will go up] but it’s not so far off that you can think, ‘[I’ll just] worry about the future when it comes.” He also said the BoE recognised that increasing rates too soon risks damaging the economic recovery.
