Soaring inflation deepens mortgage woes
New figures have revealed that inflation is now almost double the target rate, further dampening hopes for interest rate relief.
The price of consumer goods is now rising at an annual rate of 3.8 per cent, outstripping market expectations and reaching the highest rate since the consumer prices index was set up in 1997.
And with Citi spokesman Michael Saunders predicting that it could reach five per cent by the end of the year, homeowners are being advised to brace themselves in the months ahead.
On top of weakening affordability of goods - largely driven by fuel and food costs - people who have bought property for sale in London have been told their mortgage rates look set to remain high.
"The Monetary Policy Committee are unlikely to cut near-term with such high inflation, even though the UK may be slipping into recession," Mr Saunders asserted. "If the economy was not so weak, they would be hiking."
Analysts say the latest data will only contribute to growing demand for flats to rent in London, as prospective homeowners put plans to enter the property market on hold.
Published 15th July, 2008
© 2008 Estates IT Limited
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New figures have revealed that inflation is now almost double the target rate, further dampening hopes for interest rate relief.