The state of the Greek debt crisis was hammered home this week with the Greek premier George Papandreou having his phone disconnected. It was actually a mistake on behalf of the telecoms company who confused the leader's number with another that was the same apart from 1 digit and owned by someone behind on their payments. The reconnection did nothing to calm fears in the financial markets as worry spread across Europe, stock markets fell and confidence in a recovery waned. The London interbank offered rate, or Libor, for three-month loans in dollars hit 0.536 per cent. This was up from 0.509 per cent on Monday, according to the British Bankers' Association (BBA), marking an 11th straight day of rises of the rate. Libor is set by a daily BBA survey of 16 banks. Peter Dixon, an economist at Commerzbank, said: "The moves reflect fears over banking liquidity, and that has driven up the spreads."

Positively economists have hailed the most convincing signs yet that Britain is recovering from its deepest modern-day recession, as official growth figures were revised higher. The Office for National Statistics raised its estimate of gross domestic product growth (GDP) in the first quarter from 0.2pc to 0.3pc. Although the upgrade had been widely expected, and the growth rate was lower than the previous quarter's 0.4pc rate, experts were cheered by an unexpectedly large increase in nominal GDP - the measure including prices, which has been repeatedly singled out for attention by the Bank of England.

The number of private homes being built has more than doubled over the past year as house builders have moved to meet the resurgence in residential demand by restarting development programmes. New home registration levels are on the rise across the whole of the UK, according to the National House Building Council, which provides the warranties on new homes. A total of 31,038 new homes were registered during the three months to the end of April - a 74 per cent improvement on the same period last year. But private sector registrations were up 113 per cent, to 20,538, compared with last year. Public sector registrations rose by a more modest 28 per cent, to 10,500.

Britain will be forced to raise its interest rates much sooner than expected and certainly before the end of the year, the world's leading economic think-tank said yesterday. The Organisation for Economic Co-operation and Development (OECD) said that with inflation still well above the Bank of England's 2 per cent target - and continuing to surprise on the upside - higher rates were inevitable. "The authorities face the challenge of preserving credibility," the Paris-based think-tank warned in its bi-annual Economic Outlook yesterday. "The gradual drift up of some measures of inflation expectations implies a need to increase interest rates earlier than previously thought and no later than the last quarter of 2010." Rates will need to be as high as 3.5 per cent by the end of 2011, the OECD added, seven times the current 0.5 per cent at which the Bank of England has maintained its base rate since March of last year.

Talking about interest rates the latest research from Moneyfacts Group revealed that the average two year fixed mortgage rate has dropped to 4.61%, significantly down on the 6.59% reported in May 2008 and the peak of 5.21% seen since base rate fell to 0.5%. Average three and five year fixed rates have also continued to decline to stand at 5.30% and 5.74% respectively, compared with the highs of 5.61% and 6.24% seen since base rate dropped to its record low. However, with the average standard variable rate (SVR) currently standing at 4.66%, and the lowest SVR available at 2.50%, most mortgage borrowers reaching the end of their current deals are sitting tight. With interest rates having been falling, many existing borrowers have chosen to overpay their mortgage, with many also using their savings to pay off their borrowing while rates are low. "Lenders are easing their criteria and competition is returning to the market, which should be a perfect platform for a resurgent mortgage market," said Darren Cook, spokesperson for Moneyfacts Group.

The general improvement in UK house prices also saw the average value of landlords' portfolios jump by 6.1% during the first three months of 2010 to £1.52 million. According to Paragon Mortgages, the rate of growth accelerated during the period and was up from the growth of 4.2% recorded during the final quarter of last year. With the figure taking into account changes to both property values and sales and acquisitions, the lender said it suggests that landlords have been adding property to their portfolios or replacing existing stock with properties of higher value. It is the first time that portfolio values have increased for two quarters in succession since the first half of 2008, a period when buy-to-let finance remained widely available.

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