Despite the new bailout from the Bank of England, banks are sounding the alarm that interest rates on remortgages and other loans may be going up. Although the government has consistently called on banks to lower rates and offer more remortgage loans, few have followed suit. The problem appears to be getting worse as those seeking a remortgage are finding that they won’t save enough money to avoid going into default.Michael Coogan, director general of the Council of Mortgage Lenders, said: “In the short term the trend of increasing prices and products being removed from the market is not going to be reversed. As and when the banks start lending to each other, the rate for lending will go down and that means that that will start to bring the price down but it is not going to be a dramatic reversal. It is going to be a slow process at best.”Professor Charles Goodhart, a former member of the Bank of England’s monetary policy committee stated, “The credit crunch will still hit the economy but it might have hurt more if it weren’t for these measures. The measures prevent the risk of a possible recession becoming a depression.”
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