Finance news from Loans Park

London (loans-park) January 11, 2007: Some parties are surprised at the Bank of England’s decision to raise the base rate. Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors thinks that the monetary policy committee's decision to raise the rate by one-quarter of a percentage point to 5.25 per cent is a "surprise".

He, however, stated that his organisation had expected a rise to occur in February, as the UK economy continued to be strong and Christmas spending was not dampened by the rate rises in late 2006.

Mr Khatri also remarked that the housing market had shown only a muted reaction to higher borrowing costs so far, as new jobs continued to be created and wages are up firmly. Experts opine that further rate rise may affect the personal loan market and make things difficult for first-time buyers.

However, Edward Menashy, chief economist of stockbroker Charles Stanley, is of the opinion that rates will fall back again this year, dropping to 4.75 per cent before 2008.