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Consumers told to prepare for more rate hikes

Homeowners in the UK have been warned that further interest rate rises could be just around the corner, despite the ongoing slowdown in the property market.

Responding to a report issued today by the Bank of England, the Motley Fool has advised consumers that the recent series of rate hikes has "failed to dampen demand" from borrowers, with the Bank expected to increase the base rate once again in order to keep inflation in check.

The Bank's publication - described as "uncomfortable reading" by the financial advice website - states that home loans totalling £17.2 billion were granted by lenders in July, while net consumer credit rose by £1.1 billion.

"Although there are promising signs that the housing market may be cooling, interest rates, which are at a six-year high, have yet to temper consumer spending," said David Kuo, head of personal finance at the Motley Fool.

"The signs all point to more interest rate rises and once again it will be put-upon homeowners who will have to bear the brunt of higher borrowing costs," he added.

According to Nationwide, annual house price inflation fell to 9.6 per cent this month - down from 9.9 per cent in July. A personal loan can help with the cost of running a home.

See how much you could borrow with a home loan from Lombard Direct.

30/08/2007 17:08:58

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