Interest rate rise: Your reaction

The Bank of England has announced another rise in interest rates.

As widely predicted in the city, they are going up by a quarter of a percentage point to 4.75%.

The rate rise will be seen as an attempt to cool the UK's booming property market, and rein in soaring consumer debt levels.

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But business groups fear the move could hamper British companies' performance, and called on the Bank to hold fire in the months ahead.

What effect will the rise have? How will you be affected?

This debate has closed. Thank you for your comments.

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The following comments reflect the balance of opinion we have received so far:

An unbelievable reaction. The reason interest rates have had to go up is because we, the British people, are borrowing too heavily and not saving enough - not the BoE, not the government - us. The housing market is driven by our greed, not the BoE and not the government. To then blame the government and the BoE for trying to control this is just trying to avoid responsibility.
Mark Davies, London, UK

Raising interest rates is a blunderbuss approach Steve, Edinburg

Having savings in a bank account is a waste of space, even at interest rates of 6% or 7% and it's only a tiny minority of the country that would benefit significantly. Raising interest rates is a blunderbuss approach sure to injure far more people that it was actually aimed at.
Steve, Edinburgh

Well Labour blamed the Tories in Government, Who are Labour going to blame now? Let me guess, the Tories. I remember 1979 all too well - fasten your seatbelts young ones - you are in for a bumpy ride, this time however add to it what's coming - Zero Pensions!
Maurice, Newcastle

I have been a prospective first time buyer for the last 2 years. I have given up because it has become painfully evident that not a single property within the UK is being sold for what it is worth. Houses are so overpriced that buying a property seems foolish to me. I want a substantial increase in interest rates so that the housing market starts to fall back to reasonable levels. The government should put in place mechanisms to prevent people overstretching, but it seems the mortgage lenders are happy to give away money
Zak, London, UK

Not only in UK but all over the world the property market shot up drastically and sky high. It is a foolish thinking that few 1/4 percent interest rate hikes will cool the property market. Rather interest rate hikes will harm the economy as a whole with soaring unemployment, increase in production costs and finally increase in personal and corporate bankruptcies.
Siva, Toronto Canada

On the whole you have it pretty good David, Sydney, Australia

Brits, stop whinging! After living in London for 10 years I have recently emigrated to Sydney, Australia where the typical house is 8 times the typical salary, interest rates are 7%, and rental yield is a miserly 3% on buy-to-let. On the whole you have it pretty good.
David, Sydney, Australia

Putting economics aside, it's not surprising that interest rates are being used primarily to control house price inflation. House prices are out of control and unsustainable. I think the lack of investment alternatives (stock market weakness) has made the situation worse, but then I'm an observer at present and I just feel a bit sorry for first time buyers recent and near future. Most of the posts here are about personal situations as you'd expect, but at the end of the day you all make your choices and you have to live with them. You can't blame the BOE for trying to put a bad situation right.
Russell, Bedford

It proves we are run by manipulators who treat us like sheep. Lower the rates to get people hooked on mortgages, increasing house prices, and then bang, up the rates. Just like drug dealers initiate with free or cheap drugs and once your hooked, you gotta pay! Who's the winner? The powerful rich, every time.
Simon, UK

Is evicting people from the houses they cannot no longer afford really the right way to go... How many more homeless people are going to see if this carries on...
Lee Taylor, UK

I am all for a long term fixed low interest government initiative mortgage Anna, South West, UK

Hang on, Simon from London. I am an 'under 30' with very hard earned savings, given my rent, council tax and student debt repayments alone equate to 70% of my take home salary each month. I have no car and own only average clothing. Being unable to buy a house on my current salary of less than £20,000pa and the piddly amount of interest I have received on my savings for the last 5 years, I think it's only fair that me and my like friends are given realistic interest on the modest monies we have been careful to save. I agree that one-home owners should not be penalised and I am all for a long term fixed low interest government initiative mortgage. However, until such time I think it is time for the savers to be given a chance.
Anna, South West, UK

Borrowers should stop whingeing. Over the last seven years savers and retirees buying annuities have been severely punished for their prudence, as years of planning were undermined by steadily falling interest rates. Thus the cautious have been caned and the profligate pampered. Spending other people's money should never be an inexpensive option. Stupidly cheap borrowing rates are undoubtedly the most significant cause of house price inflation. When I had a mortgage, a below-average income and little savings, interest rates were high, into double figures at times. Now I have savings, they are at record low levels. Is payback time approaching? I sincerely hope so.
Joe, Yorkshire UK

It will have no effect on me because I could see the writing on the wall. It was obvious. The very moment the first rate rise came about in November I remortgaged. Not to buy a fancy new car or holiday etc. but to fix my interest rate on the precise sum I owed to pay off my mortgage. It ain't rocket science, people. As we are always told rates can up as well as down. And vice versa. And as for those who borrowed heavily on their equity when rates were at their lowest and are now moaning? What a bunch of muppets!
Max, UK

We are already working American working hours for European wages to pay Japanese living costs. Could the government have done anything else to make this country even more expensive?
Graeme Phillips, Midsomer Norton, UK

I thought the concept of punishing the whole class to catch one culprit went out in primary school John, Borehamwood UK

Hang on... The house I have lived in for seven years has gone up in value through no fault of my own, Other people are running up huge credit card debts, and because of this I have to pay more on my mortgage every month? Is it fair and reasonable to punish me for something I didn't do? I thought the concept of punishing the whole class to catch one culprit went out in primary school.
John, Borehamwood UK

This is a no-win situation. From my point of view with only months to go before my mortgage is paid off the increase is welcome as it will boost my savings for retirement. But, my children who have mortgages will suffer so there really are no winners - it's a case of swings and roundabouts. The BoE needs to curb spending i.e. credit card debt in some other way.
Cate, Oxfordshire, England

At least we are still able to take action in the best interest of the UK rather than having the European central bank which is influenced by a myriad of additional factors not pertaining to the UK.
Keith, Lancaster

Building more houses might be a good idea. But surely the government could 'persuade' the housing companies to build the type of houses people actually want. There's a new development down the road from me where they're building 4 + 5 bed homes for 499,000!! Not really helping the 1st time buyer! The solution is clearly not simple and likely to be a combination of initiatives.
DC, UK

Yet again we in Scotland have to suffer for the inflated property market in the SE of England. Another good reason for Independence!!
Colin MacKenzie, Aberdeenshire

This is taking a sledgehammer to crack a nut Rory Allanson, London

What the heck is the complacent Chancellor doing? This is taking a sledgehammer to crack a nut. Young people have been forced to pay these inflated house prices and are now very worried about steeper repayments. Instead of this crude policy by the BOE how about Gordon Brown pulling his finger out and taxing owners of 2 properties or more whom have had more than their fair share of easy profit over the last 7 years.
Rory Allanson, London

As a mortgage adviser who has just bought his first home it is not good news for me. Partly as the more wary people become on borrowing to buy essentially what is a required item "a roof over ones head" the harder it is for me to earn money and therefore pay for my own loan. I hope that the BOE will let these changes take effect before putting rates up again. we have got the message now...
Anon, Lincolnshire

This rise is a travesty. The government should impose a personal liability limit on loans of four times their income. This way if the banks loaned higher than this they could only recover the loan up to this limit. House prices would fall then!
Scott Coleman, Rushden, UK

Another despicable rise in costs for the British. If it wasn't bad enough living in the most expensive country in Europe and one of the top three in the world. Disgusted.
James Zurek, Piddletrenthide, Devon

I have a large mortgage so interest rates going up are bad for me. However something needs to be done to stop the 'I want it now' borrowing culture that has sprung up over the last few years in the UK. No one under the age of 30 appears to have any savings (although they do have shiny new cars and brand new clothes...) and with the government having trashed any chance of sorting out a decent pension, ways need to urgently be found to encourage people to start saving for themselves.
Simon, London

Another example of the ladder being pulled up by those who already own property Stephen Polling, Birmingham

This is ridiculous - another example of the ladder being pulled up by those who already own property. If the government really wants to reduce house prices, how about a prohibitive tax on rental income or large stamp duty on purchase of second homes? All this measure will do is make mortgages even larger for first time buyers, with the added bonus of high interest rates which are irrelevant to every product except houses at present.
Stephen Polling, Birmingham

Looking at the comments on this page, it seems like those with mortgages don't want a rise and those with saving or who are unable to get on the property ladder want a rise It's all a balancing act, and unfortunately, it has for too long been in favour of homeowners. Let's give savers a chance for a change!
John B, Gloucester, UK

What choice is there but to put up rates unless some kind of legislation is bought in to keep the lid on house prices once and for all. Meanwhile the party goes on for all the money swindling fat cat estate agents out there. I pity couples who are taking their first step on the property ladder.
terry, London, UK

Interest rates are far too blunt a tool to control the economy. They put pressure on people who are only just able to service their loans (usually those earning smaller salaries) while not reducing the inflationary spending of those with plenty of money. Taxes on income and consumption are a far better way of controlling the economy as they also have an impact on those people who are not effected or bothered by interest rate increases.
Chris, Thatcham, UK

I was hoping they would put it up to 5% Ben Browning, Brighton

I was hoping they would put it up to 5%. Something desperately needs to happen with the housing market. It's not much help for first-time buyers like myself if prices rises are cooling - we need them to start dropping to more realistic levels.
Ben Browning, Brighton

As my mortgage is less than my investments, I'm perfectly happy to see interest rates rising. The rises only cost me a few pence, and if they serve to reign in the overstretched borrowing of others, so be it.
Richard, England

About time too. Like most other first time buyers, I've been sick to death of home-owners crowing over how much their houses are worth whilst not being able to buy one of my own. I've got a nice pile of cash now and high interest rates suit me just fine. This has been coming for ages so people with mortgages should have prepared for it instead of whining now. Bring on the next rise!
Richard, Birmingham, UK

The problem is the bizarre definition of inflation used by the BoE, excluding housing. Housing is my, and most people's, largest outgoing, but is excluded unlike, say, potatoes; I'd struggle to spend as much as potatoes as I do on rent. I can't afford to buy a house and probably never will. I expect it would take interest rates of 10-15% to bring the real inflation including housing to the target. So be it. 0.25% is far too little, too late. It needs to go up by 1% a month, every month, until house prices have dropped to their long-term average - which would take the average house from £190K to £70K, three years average salary. Like it was for our parents.
john, london

It is becoming cheaper to rent than pay a mortgage Joe Copping, Kent

The whole situation is ridiculous. I bought a flat last summer and now think I may as well sell it as once again it is becoming cheaper to rent than pay a mortgage. If we just had some stability for a period of time then things would level out and we would learn to adjust. It feels like money is a one way street with water prices going up, council tax going up, petrol prices going up and salaries remaining static. This is why people borrow money so that they can have things to give enjoyment. I really do question the quality of life in this country.
Joe Copping, Tunbridge Wells, Kent

Having struggled hard to get onto the homeowner ladder I am now being penalised with high interest rates which could eventually lead to repossession for some people. Start penalising the banks and building societies and credit card companies who should not be giving such large amounts of credit irresponsibly. How much profit did the banks declare???
Kevin, Croydon

Let's have interest rates back to 10% to slow down the ridiculous house price situation and let this pensioner receive something from his investments allowing him to retire.
Pensioner, Cambridgeshire, Eaton Ford, Cambridgeshire

I saw this coming 18 months ago and fixed the mortgages on our home and rental properties at very favourable rates against the advice of our broker.
Msmo, London UK

For myself the rise will make little difference. For the young trying to get on the property ladder it just makes things worse. Mr Brown was claiming he had created the lowest interest rates in a generation only a few months ago, what will he be claiming now for his proclaimed stewardship of the economy?
Mike Hall, Kingham, UK

How many banks have passed on the rate increase to savings accounts? Kerry, Manchester

People have made the comments that it is good for savings that interest rates have risen, but how many banks have passed on the same rate increase to savings accounts as they have to mortgages? Because I can tell you my bank certainly hasn't!
Kerry, Manchester

I am concerned the BoE is trying too hard to be gentle and raising rates piecemeal is allowing people to disregard the slowdown effect that the bank is trying to create. I think that unless they properly bite the bullet and put rates up 0.5% or more at a time the message will not strike home. In the end the pain will be worse.
Craig Tanswell, Bournemouth, UK

Lucky we've got all this terrorist alert stuff to take our minds off it, eh?
Jonathan, UK

It's my birthday today. Gee, thanks, Bank of England, for putting my mortgage payments up again. Who could imagine a better birthday present?
Adam, London, UK

Its ridiculous. I have scrimped and saved to get on the housing ladder at times of low interest, then when I can finally afford a house, the mortgage rates on it shoot up. Damned if you do and damned if you don't.
Anonymous

We may be forced off the housing ladder once more Samantha, London, UK

As a first-time buyer at the end of last year, the constant interest rate rises worry me. My mortgage (and associated income insurance) is already over £1000 a month, which my partner and I can just about afford at present, but if they continue pushing up interest, we may yet be forced off the housing ladder once more. Not, I presume, the desired effect.
Samantha, London, UK

This won't help soaring consumer debt much of which is with store cards and loan companies charging way in excess of the base rate. It will probably only stem house price rises when the cumulative effect of 2004 starts to impact on the payments calculated for 2005.
Lorraine, St Albans, UK

Interest rates to cool house prices by making houses still less affordable? Much better to strengthen tenants' tenure which will scare buy-to-let speculators and improve the situation for both renters and first time buyers, without harming the rest of the economy.
Carl, Bristol

Economy is not exact science, it is a stochastic game. That BoE can regulate consumer behaviour in a controlled fashion is a fiction: there is hardly any mathematical or historical evidence for that - just recall that Greenspan's efforts turned out to be fruitless in the end. BoE can, however, trigger one or two unpleasant, uncontrollable avalanches. The bank will never get any blame for that, that's for sure.
Dmitri, London

I'd just like to thank the BoE for putting final nail in my coffin Ged, Liverpool

Having watched my pension go nowhere along with my ISA's and with a huge shortfall on my endowment I'd just like to thank the BoE for putting final nail in my coffin. If they really want to solve the housing price problem, simple BUILD MORE HOUSES - especially in the South East!!
Ged, Liverpool

Increasing interest rates to reduce house prices is twisted logic. Although house prices come down, the cost of the borrowing goes up exactly to match ¿ so new buyers are no better off. They have a lesser debt, but it costs them more. Debt is what you pay back, not what you borrow. Interest rates are not an effective way of controlling debt. A better way would be to license all lenders, and then revoke the licenses from those who end up in court too often ¿ i.e. those who are lending irresponsibly.
Mark Fulford, Southampton, UK

No - why should people who are not moving house continually have to pay for an over inflated housing market. With oil prices about to put all other expenses up it's unfair to add to this burden by increasing the mortgage rates
Alan, Paisley, Scotland

The news that the Bank of England is trying to cool down house prices is not true. When investors put their money in the markets, they want some returns, and putting the interest rates up gives them that return while affecting the rest of us with higher mortgages, loans and bills. How many adverts have you seen for loans in the past year? Exactly.
Andy, Guildford, UK

This interest rate hike is largely aimed at the property market. Alan Tayler, Wivelsfield, UK

Despite the Bank of England's change of inflation index to the Consumer Price Index that supposedly excludes the housing market and council tax (for Gordon Brown's and forthcoming electoral convenience) this interest rate hike is largely aimed at the property market. The trouble is that the July mortgage figures which worry the Bank reflect house sales back in March/April. Since then, two interest rate hikes and doom and gloom speeches from Mervyn King have actually made the property market go flat as a pancake. The interest rate increase is therefore unnecessary, is likely to depress consumer spending and runs the risk of making the economy go right off the boil.
Alan Tayler, Wivelsfield, UK

I think they should raise rates to 5% now. High house prices do no-one any good in the long run.
Chris, Cambs, UK

Yes! House prices are stupid, causing first-time buyer ages to shoot up. Besides, I'd like my savings to start earning some real money.
Gareth Rippingale, UK

I don't think putting interest rates up will help the first timers into the housing market Claire, Somerset

Personally I don't think putting interest rates up will help the first timers into the housing market as people who own houses will stay put because they can't afford to trade up. It's ok saying that people can't afford to buy at today's prices but if rates go up so do repayments; this may also have the effect of putting house ownership beyond the purses of many. At the end of the day there are too many people and not enough houses and I believe that no matter what the interest rate is, that simply won't change.
Claire, Somerset

The BoE remit is to keep inflation within target - which it is. There is no justification for the rise. For those who think it will mean affordable housing, think again. Borrowing becomes more expensive so you still cannot afford even cheaper houses!
Rob, Bracknell, UK

Definitely, it's disgusting that there are people out there who earn £25k plus and can't afford to buy their own house.
Beck, Cardiff

Every time a rise happens must we really endure the constant questions of how it will affect us all? It's the same old story every time, some people are prepared and some aren't. We know the score.
Tony, UK

No, rate increases have done little to influence the housing market. High house prices are chiefly the result of a supply/demand issue. The only thing that interest rate increases have achieved is a massive boost in profits for the banking sector.
Don, London, UK

They should raise interest rates if it means that people will stop borrowing money Julia, Bristol, UK

I think they should raise interest rates if it means that people will stop borrowing money they haven't got, and if it encourages people to save... But I doubt VERY much if it would do that. It would just mean that more people are crippled by repayments. Society needs to change, so that people find "contentment" within. And stop buying possessions, goods, and things in some bid to keep one step ahead of the "Jones" and feel good about themselves...
Julia, Bristol, UK

No, interest rates should not be raised. Stamp duty should be increased (on a temporary basis) to combat house price inflation. It should be an objective of economic policy to keep interest rates low. Interest rates should not be a tool of economic policy - that is what taxes are for.
Peter Judge, Brighouse, Yorks, UK

Absolutely! The Bank of England has been far too timid in the past and its actions have done little to curb a boom financed by consumer debt (mainly through increased property borrowing) and profligate public spending. Inflation is also a lot higher than official figures suggest, as they take little account of the cost of services, taxes, and property costs... Although the Bank of England might like to keep the boom going until the next election, the longer this false economy lasts, the bigger the correction will be...
Kevin T, Alton, UK

I am truly concerned about the effect that higher interest rates are having on UK manufacturers Roger Morgan Freedlan, Whitwick, England

Its a delicate balancing act by the BoE. I am truly concerned about the effect that higher interest rates are having on UK manufacturers. It is getting harder to invest in the latest, state of the art production & manufacturing equipment as it is in the UK, & higher interest rates mean that even fewer manufacturers will be investing in their UK operations. This investment is vital for manufacturers to not only stay competitive in the UK, but also to compete in the global market. Those out there who think we can survive as a nation on the Service Industries are in my opinion, misguided. I think the time has come to separate domestic interest rates from business interest rates. This will still control the housing market from overheating, but also give manufacturers - & their employees, a reasonable chance of survival.
Roger Morgan Freedlan, Whitwick, England

Given the current weakness of the economy I am not sure a rise is advisable. I think house prices are an effect, not cause for inflation and should be ignored by the BOE. Given the high level of indirect taxation, and the knock-on effect of oil prices, and the fact that we are far more linked to the global economy a half a point could well make the pound very strong on international markets and tip us back into recession. I keep my personal finances fairly interest neutral so rises and falls have little effect.
Rex Lester, Chessington UK

An interest rate rise might help at least to keep house prices from rising, if not to bring them down, so seems a good thing. On a personal note, as I only have savings, a rise would be very beneficial to me and others like me, and a lot of older people who have savings which have not been bringing in much of an income for a long, long time.
Jenny, Benenden, Kent