Interest rates likely to stay unchanged

Updated 10.41 Fri Aug 31 2007
Keywords: interest rates, economy, Bank of England

Interest rates are set to remain at current levels amid new evidence that households are struggling to cope with higher mortgage payments.

Economists predict that the Bank of England will hold borrowing costs at 5.75 per cent after five rate hikes in the past year.

Economists predict that the Bank of England (BoE) will hold borrowing costs at 5.75 per cent after five rate hikes in the past year

New figures show that the amount written-off by banks in bad debts has surged to nearly £9 billion.

Lenders wrote off £2.3 billion in the second quarter of the year, up from £2.1 billion in the first three months of 2007.

Recently banks have been under pressure in recent stock market turbulence.

Investors are fearful over the banking sector's exposure to increasing default levels from borrowers in the US sub-prime mortgage market, with concerns that higher default rates could spread to the UK.

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