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Last Updated: Thursday, 6 November, 2003, 16:11 GMT
Interest rate rise - your reactions
Out of pocket?

The Bank of England has raised interest rates by a quarter percentage point to 3.75%.

The move was widely anticipated, but it is the first rate rise in almost four years.

High house prices, runaway debt, and more buoyant economic growth have played a part in the decision.

But while the policy gurus try to wrestle with the credit and housing booms, how will the measures affect ordinary people?

BBC News Online asked for some views on how people would be affected by the rate rise.

Can they ride out the increase, or will the rate rise cause misery?


  • George Elliot, 28, a design company director from Newcastle

    Mr Elliot says the interest rate rise puts him in a "lose-lose" scenario and he fears he will be hit twice by the interest rate rise.

    This way hits people like me hard
    George Elliot

    "As a new homeowner I expect the rate increase to cost me nearly 20 a month but as a businessman I fear an economic slowdown," Mr Elliot said.

    "The Bank of England obviously fears that consumer spending is too strong and personal debt too high, but this way hits people like me hard."

    Mr Elliot's firm relies on the leisure industry for its custom, and makes him feel at risk.

    "Business has been fantastic but leisure depends on disposable income. Cut that and trouble can follow."


    Morris Crawford, a building contractor and developer in Northern Ireland

    Morris Crawford is a building contractor and developer in Northern Ireland.

    "We anticipated it and we anticipate that this is not the end of it," he told BBC News Online.

    "We're having to take it into account in anything that we would have planned which is going to take more than two years to complete."

    He said rate increases affected the building trade, as it dented the confidence of home buyers who may be worried about being left in negative equity.

    Business people will still travel and tourists will still travel
    Morris Crawford

    Mr Crawford pointed out that before embarking on a new project: it is now a case of "trying to predict what the market would be like in two years time".

    He has also owned a restaurant in Killyleagh in County Down, for the last 12 years, but is less worried about the impact the rate change would have on that business.

    "Business people will still travel and tourists will still travel," he said.

    However, he hopes the interest rates will stay low as he believes Northern Ireland "needs every piece of help it can get".


    Jane McDonald, 28, is a an IT analyst and mother-of-one from Glasgow, looking to buy another home with her husband.

    The interest rate rise could not have come at a worse time for mother Jane McDonald.

    She and her partner, David, are in the process of looking for a larger home as the couple are planning on having a second child and need more room.

    HOW WILL IT AFFECT YOU?
    The payment on a 100,000 mortgage will rise by 14 a month. Find out more

    They had planned to take on a fixed-rate mortgage but the rise now means their payments won't be as low as anticipated.

    "I hadn't realised the rate was going to increase just yet as it has been low for such a long time," said Mrs McDonald.

    "But I suppose it had to go up at some point and it's just a pain that we happen to be looking to buy another home just as it has.

    "The mortgage we have on our flat at the moment is on a fixed rate so it won't affect and we've made quite a bit of money on it so negative equity shouldn't be a worry for the moment.

    Her new mortgage payments will be more than they had budgeted for so they will have to go back and budget again.

    "But we're both on good money so it shouldn't affect us too much - it's not like it's gone up by a whole percent or anything - we can cope with a quarter percent rise.

    "If we bide our time it might even work in favour and keep the house prices in check or at least dampen them so they stop rising so quickly. We might just put things on hold at the moment and see what happens to the market - we'll just have to talk it over.

    "Whatever happens, we need to find a new home so I suppose we'll just have to cope with it, see what we can afford now and take the plunge when it's the best time for us."


    Daniel Yates, 31, a data manager for an information company, is a first-time buyer who lives in Enfield, north London, and has a young family

    Mr Yates took the plunge into the London housing market last summer - and recently became a father.

    He bought his first property, a two-bedroom Victorian cottage in Enfield, with his wife Aoife.

    They had budgeted for a rate rise, but now their financial planning has been unsettled.

    My worry is that this is the beginning of rises creeping upwards.
    Daniel Yates

    Three weeks ago, their new baby daughter Dervla was born - and his wife, an administrator, is now on maternity leave.

    The couple took out a discount mortgage, and have therefore made the most of interest rate reductions over the last year.

    But, with the new baby and the cut in income coming in, they are worried about the interest rate rise.

    "It won't kill me, but my worry is that this is the beginning of rises creeping upwards.

    "It is not disastrous, but I will certainly be keeping an eye out for when they next start talking about a rise.

    As Mr Yates is on a discount mortgage, the rate he pays is directly related to the Bank of England base rate.

    "I'm just wondering how quickly my lender will put up the rate. If there is a rise they normally put them up quickly...you do always tend to get stitched."


    Sally Dolden, 44, a housewife from Rochester, Kent, has taken steps to protect herself from the impact of a rate rise.

    A few weeks ago, believing that interest rates would soon be on the rise, Ms Dolden decided to move her 163,500 mortgage to a fixed rate provider.

    I don't believe this will be the last interest rate rise
    Sally Dolden

    As result, the rise in the Bank of England base rate has not hit her.

    "I was getting increasingly worried that rates could rocket and I would not have been happy, or comfortable, paying 7 or 8% interest," she said.

    Ms Dolden hopes that when her fixed rate period ends, interest rates will have returned to a low level.

    Like millions of Britons, Ms Dolden has had her fingers burnt by a sudden rise in interest rates in the past.

    "I don't believe this will be the last interest rate rise - my fear is that we will see a return to the bad old days of negative equity and house repossessions...people just owe too much money."


    Andrew Davies, 33, a production manager from south east London and his wife Samantha Davies, 37, have a young family

    Mr Davies has read the interest rate runes and recently fixed his 160,000 mortgage for two years.

    It might keep a cap on house prices which have been getting out of control
    Andrew Davies
    As a result Mr Davies is protected from a rate rise, particularly as he owes less than 600 on his credit cards.

    But with his wife at home looking after their two children, Mr Davies is the sole earner.

    Speaking to BBC News Online, following the decision, he described the interest rate rise as "inevitable" - and gave it a partial thumbs-up.

    "It might keep a cap on house prices which have been getting out of control," he told BBC News Online.

    However, he said he would worry if rates went up significantly over the next few years.

    "If it goes up another quarter in three months time and then that sort of movement develops into a long-term trend, we will be getting concerned," he said.


    Diane Follan, from Mallusk in County Antrim, has lived in a detached bungalow with her family since June 2000.

    The married 37-year-old mother of three admits she is worried about the prospect of a further rise in interest rates.

    "We have a discounted, variable rate mortgage but have got a loan secured on the house. So that is going to go up as well," she said.

    "We are worried. If the interest rates keep going up, we might go into negative equity."

    She started a part time job several weeks ago to try to help with the bills, but finds it difficult to get childcare.

    "If it does get any worse, we might just have to put the house on the market," she said.




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