| Predicting the future is always a difficult task, | | | | mortgage rates often being above that level. |
| particularly when it comes to economics. UK interest | | | | In that context, the interest rates of 2007 seem pretty |
| rates are a source of concern for many of us - does | | | | low. |
| the past give us any hints as to the future? | | | | Big drops in the base rate weren't seen until 1992 and |
| Interest rates are one of the major factors that | | | | 1993. At the beginning of 1992 the UK base rate stood |
| influence the economy. In the case of most of us, it is | | | | at some 10.5%. By the end of 1993 it had fallen to |
| often their impact on the housing market that causes | | | | 5.5%. |
| the most interest. | | | | That dramatic drop was seen in some exceptional |
| The fifth consecutive rise in the Bank of England's | | | | circumstance but it should stand as a warning to many |
| base rate left interest rates standing at 5.75% by the | | | | home owners. Interest rates can move quickly, leading |
| summer of 2007. With signs of the housing market | | | | to significant changes in our mortgage repayments. |
| slowing, many home owners were expectant of a | | | | Interest rates now stand at their highest level in six |
| drop in interest rates. | | | | years and yet we have seen that they are still |
| Many saw interest rates as being relatively high and | | | | relatively low by historic levels. We're not talking about |
| this was certainly the case when compared to a short | | | | ancient history here either - we're looking at levels |
| period in the months before 2007. Less than a year | | | | within our lifetimes for most of us. |
| earlier interest rates had stood at just 4.5%. | | | | The future of interest rates will be interesting to watch |
| But were interest rates really all that high? Historical | | | | but it's importance that we don't base our financial |
| evidence suggests that we'd rarely had it so good. | | | | decisions on assumptions about the future direction of |
| Back in 1989, with the housing market in trouble, the | | | | rates. |
| interest rate stood at a seemingly incredible 15%, with | | | | History tells us that interest rates can vary rapidly. |