Predictions for February rate rise - commercial mortgages

08 January 2007

Some experts are predicting an increase in interest rates for February, which could have implications for commercial mortgages.

According to commentators, the Bank of England could be on track to increase the base rate from five per cent up to 5.25 per cent, but it is widely thought that borrowing costs will remain steady.

This means that investors entering into commercial mortgages would expect to pay in line with increases.

"There is clearly a risk that rates will rise again next month," Philip Shaw at Investec told Reuters.

"However, we do not feel that there is a great sense of urgency on the [monetary policy committee] and there is unlikely to be sufficient evidence on wage settlements one way or the other by February''s meeting."

Rising wages have been highlighted as a key driver of possible interest rate growth, following reports that pay rises are at an average of four per cent, outstripping inflation.