2007-01-16 04:37:34 · 7 answers · asked by Brian G 1 in Business & Finance ➔ Personal Finance
Inflation shouldn't directly increase your mortgage but in general when inflation goes up the bank of england increases interest rates to try to limit spending. If you're on a variable rate mortgage the interest you pay will therefore increase and your payments will go up.
2007-01-16 23:55:16 · answer #1 · answered by A Nonymiss 3 · 0⤊ 0⤋
The Bank of England has been given the job of keeping inflation below 3% by Gordon Brown. If it goes above this the governor of the Bank of England has to write a grovelling letter to Gordon explaining why.
Therefore the boe puts up interest rates because this reduces people's ability to borrow money and they have less money in their pockets so they don't spend so much and that keeps prices down because the shops have to cut prices to keep selling.
Get yourself on a fixed rate as soon as possible. If you are on a standard variable rate paying 7% or more you are paying far more than you need to
2007-01-16 04:43:32 · answer #2 · answered by The Mad cyclist 4 · 0⤊ 0⤋
It doesn't directly, it goes up when interest rates go up. The Govt. uses the interest rate to control the rate of inflation, and as it is currently 3% against a long term target of 2% they are trying to rein in spending, the driving force for inflation, to get the rate of inflation down. Better that than the boom and bust economy that existed for many years before the current stability - after all we don't want 50% wiped off the value of our properties like happened in the late 80s!!!! Dunno about you but negative equity is not a phrase I want to experience!!!
2007-01-16 04:46:30 · answer #3 · answered by Buckaroo Banzai 3 · 0⤊ 0⤋
You have an ARM (Adjustable Rate Mortgage). It generally starts at a lower rate than a fixed, but has an adjustment built in that's tied to the Prime Lending Rate. It's a good deal if Prime goes down, but a lousy deal if Prime goes up.
First link is more info that you wanted to know.
Second link is info on whether the adjustable or fixed rate is best.
2007-01-16 05:07:44 · answer #4 · answered by dcomputerman 6 · 0⤊ 0⤋
the interest rates are increased by the banks to offset inflation.
2007-01-16 04:43:52 · answer #5 · answered by Alfred E. Newman 6 · 0⤊ 0⤋
because inflation pushes up the price of everything, including lending. It costs your lender more to borrow on the money markets to lend to you, so they have to pass on the increase.
2007-01-16 04:41:57 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Because you do not have a fixed rate mortgage!!
2007-01-16 04:40:29 · answer #7 · answered by Anonymous · 1⤊ 0⤋