Analyst outlines household debt concern

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Analyst outlines household debt concern

LONDON, UK - An analyst for Dresdner Kleinwort Wassertein has outlined concern at the current level of household debt.

Nick Seaward said that present indebtedness was likely the key factor behind the Bank of England's decision to increase interest rates by a quarter point to 4% yesterday.

Speaking on BBC Radio Four's 'Today' programme (6.19am), Mr Seaward said of the MPC: 'They would have been quite alarmed at the increase in indebtedness of households, and I think that is probably their prime motive for putting up rates yesterday.'

'It is much higher than five to six years ago.'

If rates were to rise to 4.5% by the end of the year, the debt service for the average household would increase to over 9%, the analyst said.

'The last time it was that high was back in 1998 when rates were 7.5%, so you can see the overall indebtedness'.

Interest rates were last increased in November last year, also by a quarter point.

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