INTEREST RATES are to rise by a further 0.25%, the Bank of England‘s Monetary Policy Committee announced on Thursday (June 10).
The rise is the fourth since November 2003 and takes the new base rate to 4.5%.
Widely predicted by City analysts and traders, the committee‘s decision comes as previous rises have failed to contain consumer spending and the rising housing market.
Some experts are warning interest rates could rise further by the end of the year.
David Hudson, chief agricultural adviser at the Agricultural Mortgages Corporation, said: “Taken together with increases in fuel charges, this rise has very serious cost implications for UK farmers.”
Recently released figures from the Bank of England showed total borrowings in UK agriculture were at their highest point for 17 years for the first quarter of the year. Agricultural borrowing now stands at £8bn.
With the average AMC mortgage lend at £150,000, today‘s increase would mean an extra cost to farmers of £375 a year, or £31.25 a month, on an interest-only basis.
Tim Porter, agricultural director at Lloyds TSB, said further increases would be necessary to control inflation.
“We cannot stress the importance of keeping on top of cash management in order to minimise finance charges.”