Interest rate rise on the way

We hear from the chancellor just after 0800

City watchers are expecting interest rates to rise today, which will be the first time they've gone up in nearly four years.

The Bank of England's monetary policy committee will decide at noon whether to increase rates from their forty-eight year low of three-and-half per cent.

The bank is concerned about the continuing housing boom and rising levels of debt.

A new survey this morning suggests one in four of us can't keep up with our payments.

Breakfast will have more on this throughout Thursday's programme.

We heard from Sam Waller, a single parent, who declared herself bankrupt last year and Malcolm Hurlston, the chairman of the Consumer Credit Counselling Service

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And we also heard from the Chancellor of the Exchequer Gordon Brown, you can see that interview by clicking on the link above.

Mr Brown told Breakfast "Our concern has been to create a stable environment for home owners... there are a million more home owners."

"Our economy has survived the world downturn... we're growing faster and strengthening and we've got low inflation low debt and good and sound fiscal position."

The chancellor went on to say he would back the Bank of England's decision and would be looking to avoid the violent economic cycles of the past.

Debt and Bankruptcy It was very easy... they'd extend your credit. Unfortunately I couldn't afford to pay and was in a no win situation Sam Waller

It's predicted that today's rise could be a quarter of a per cent, and that would mean more expensive mortgages for home owners, although it could also mean higher interest being paid to savers.

The Bank's Monetary Policy Committee (MPC) will also be worried about the strength of house price inflation and consumer spending, both of which have shown little signs of cooling in recent weeks.

The cost of borrowing has fallen steadily in the past two years, tumbling from 6% at the start of 2001 to a new 48-year low this summer.

But with economic prospects continuing to improve, analysts have already warned that more interest rate increases will follow over the next year. One expert last week predicted a figure of 5.5% by 2005.

A quarter-point increase, which will be among the first to be sanctioned by a major world economy, will add £9 a month to an average mortgage of £60,000.