Since April of this year the base interest rate has been at its lowest rate in the history of the Bank of England, which spans over three hundred years, and currently stands at just 0.5 percent.

The central bank has slashed the base rate in the hope that this would help to increase affordability and would ultimately help to revive the property market.

Many industry officials have predicted that the interest rate will remain at this all time low for some time to come, which is good news for cash strapped homeowners.

However, one economist, Simon Ward, has recently warned that interest rates could start to increase early on in 2010, and that the rate increases could be sharper and faster than seen in the past.

He added that inflation was also likely to increase quickly as a result of the quantitative easing programme that the government has put into place.

This brings mixed news for consumers, as whilst homeowners will see their mortgage repayments increase with the base rate rises savers will also see an increase on their returns.

Most economists have already predicted that the base rate will rise once the recession in the UK looks to be over but there is speculation over just how rapid and steep the base rate increases will be.

Mr Ward said that the rate rises would most likely be higher than average, and homeowners with tracker or variable rate mortgages needed to brace themselves for a possible sharp increase in repayments.

Mr Ward said: “An eventual withdrawal of monetary stimulus is likely to take the form of a rise in Bank Rate rather than a reversal of quantitative easing. Given the historically low starting level [of interest rates], rises in Bank Rate, when they begin, could be larger than in the initial stages of prior cycles.”

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