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."