‘Prepare for a rate rise’ say mortgage lenders

Whilst the number of homes repossessed in the UK during the Spring fell, households have been warned by lenders to prepare for rate rises.

The Council of Mortgage Lenders (CML) said a total of 5,400 properties were repossessed in the second quarter of the year. This was down 1,000 on the previous three months, and down by 2,200 on the same period a year ago.

The CML said that it would welcome Bank rate rises only in “baby steps”.

Paul Smee, director general of the CML, said “Rates will rise at some stage, of course, and borrowers should be planning for that now”.

“We welcome the message from the Bank of England that, when it raises rates, it plans to do so in a series of ‘baby steps’, matched to a careful assessment of the ability of households to deal with higher borrowing costs.

“Any borrower anticipating payment problems should talk to their lender as soon as possible.”

Mark Carney, the governor of the Bank of England, said in his quarterly inflation forecast on Wednesday that any rise in interest rates would be gradual.

The number of repossessions was at its lowest level since quarterly records began in 2008, but was in line with the CML’s expectations.