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Bank of England: Home repossessions to stay low

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by Kay Mitchell

According to Sir Mervyn King, the Governor of the Bank of England, a surge in home repossessions is unlikely as UK interest rates are set to remain low.

Repossessions have fallen over recent times and many experts have previously argued that homeowners have been saved from repossession because of historically low interest rates, which has driven monthly mortgage repayments down.

Giving evidence to the Treasury Select Committee today, Sir Mervyn reiterated interest rates will remain at the historic low of 0.5% for some time as the economic recovery remains sluggish.

Today, official figures revealed the economy grew by 0.5% in the January to March period and the slow recovery means the Bank of England will keep rates low to stimulate the economy.

Rates have been at the record low since March 2009, when the economy was in the midst of recession.

Sir Mervyn said: “The reason we would raise interest rates would be in the context of a much stronger economy with unemployment falling rather than rising.”

Last month, the Council of Mortgage Lenders forecast that 40,000 families will have their homes repossessed during the 2011 year.

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News posted: June 28, 2011

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