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Interest rate of 3% 'soon to be the norm'

An interest rate of around 3% is likely to become the norm within three to five years, according to the outgoing Bank of England deputy governor for monetary policy.

Charlie Bean's prediction that it could settle at a lower level than the pre-crash period came amid suggestions the move away from the historic-low 0.5% base rate could begin sooner than expected.

"The Bank rate averaged about 5% in the decade or so before the crisis," Mr Bean told BBC Radio 4's The World At One.

"It's reasonable to think that, because of the headwinds that are still out there as well as some of the global forces... perhaps the level we go to three or five years out might be a couple of percentage points below that," he said.

Last week, Matthew Whittaker of the Resolution Foundation told the Belfast Telegraph that homeowners here will be hardest hit by future interest rate rises.

The think tank suggested that one in six here are in danger of being overwhelmed by debt and trapped as a 'mortgage prisoner' in uncompetitive loans – a higher proportion than any other UK region.

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