HOMEOWNERS face the prospect of interest rates stabilising at about 2.5 per cent by early 2017 after the Governor of the Bank of England told the country to stop its obsession with the issue.
After weeks of fevered speculation over a rate rise from the current historic record low of 0.5 per cent, Mark Carney suggested yesterday in a radio interview that 2.5 per cent - about half that of the previous normal rate level - was the new target.
He said the gradual rise was because big rises, as have happened in the past, would have more of an impact on already-stretched household budgets.
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Mr Carney told BBC Radio 4's Today programme: "What I am telling you is that the old normal is not the new normal."
He added: "The big picture is where interest rates go over the medium term, because, if I'm taking out a mortgage, that's what I care about, and if I'm thinking about investing in a new plant, if I'm thinking about hiring people, that's what I care about, because those are the debts that I have to service."