HOMEOWNERS could be facing an early increase in interest rates as the Central Bank considers whether to take steps to curb a rapid growth in borrowing.
The bank could be keen to let rates rise because of fears that strong borrowing and the buoyant dousing market will feed through to inflation.
Wholesale interest rates the key to determining retail interest rates reached an important point yesterday. The key one month inter bank rate moved over 5.5 per cent after the Central Bank released figures showing a sharp increase of 13.3 per cent in the year to the end of June in borrowing from banks and building societies.
The 5.5 per cent rate is generally considered to be a trigger for retail rate rises. The rise puts even more pressure on the banks' profit margins and banks and building societies may act if the rate remains at that level for a week or two.
Ultimately, the Central Bank will decide on any rise in retail rates for borrowers and savers. The Bank may not act immediately, but even allowing the status quo to remain could force a quarter point rise in rates charged to borrowers.