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Homeowners Relax As Interest Rates Stay Put

The Bank of England's rate-setting body, the monetary policy committee (MPC), has voted to maintain the official cost of borrowing at 5.25 per cent, following a 0.25 per cent rise in the base rate last month. If the bank had raised rates, which many pundits though was highly likely, homeowners with a typical 100,000 mortgage would pay 63.79 a month more than they did last August, according to the Independent. The rate hold follows official figures revealing that mortgage approvals fell in December, suggesting to some experts that the August and November rate rises had started to take hold.

HSBC economist Karen Ward said: "We think the MPC signalled in January that they didn't have any further hikes preconceived and we don't think there has been the data to justify since then," she said. "The ones last year are still feeding through so it's still going to take some time to have its full impact. It does look like things are slowing already." Last month, it emerged that inflation was at a 15-year high, which prompted many analysts to predict a rate rise before the summer. Young people risk impeding their ability to obtain credit in the future because of their reckless approach to borrowing and spending, debt expert and author James Falla has said.

He said that young adults, who rack up massive credit card bills but have no property assets, will probably be advised to go bankrupt because there is no risk to their home. Mr Falla, who wrote a best-selling guide to debt solutions, said that the younger generations no longer feel obligated to pay off as much as their debt as possible. "They are just thinking: 'Well, the bank shouldn't have lent me the money in the first place so I am going to go bankrupt'," he said. Some commentators have expressed concern that consumerism, combined with a 'live for today' attitude, is pressuring young people to take on more debt, thereby increasing the chance of them being refused credit in the future. Insolvency practitioner Melanie Giles has said that while most debtors feel they ought to repay all their debts, future generations may feel rather differently.


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