The Inside Edge
If you’re looking for a mortgage now or considering starting the search in the near future, there’s a bit of good news to come out of the City. The Bank of England has said that it is not likely to change its monetary policy stance soon leading experts to suggest that interest rates will not rise until at least 2014.
The chances of a rise in interest rates in 2011 started to ebb away following the steady flow of depressing news regarding the British economy and worsening prospects across Europe.
Members present at the July Monetary Policy Committee meeting voted 7-2 to keep rates held at 0.5%. The minutes of the meeting also add that members admitted that inflation would go above their prediction of a peak of 5%.
This news comes just one day after Woolwich revealed its cheapest mortgage products for over 15 years – they have reduced the rates on a third of all their tracker and fixed mortgages.
Vicky Redwood, of analysts Capital Economics said “Our long-held view is that interest rates will remain on hold. We are not expecting interest rates to rise now until 2014 at the earliest.”
Economic forecasting company Ernst & Young’s ITEM Club also reported that they expect no change to the base rate until at least 2014. The base rate right now is historically low and was first introduced back in March 2009 and it could be here for at least another 12 months.
Other financial analysts have said the Bank of England is “stuck between a rock and a hard place” with both growth deteriorating faster than first predicted, and inflation pressures increasing.
The Good News for Mortgage Seekers
Lenders are really starting to push there products onto the market right now and there’s a lot of fierce competition out there – great news if you looking for a mortgage right now. Being able to fix your mortgage for 5 years at rates below 4% is a pretty good offer. Mortgage rates are being pushed down by predictions that the base rate is unlikely to rise anytime soon and also swap rates affecting fixed rate mortgage products have also fallen. Many lenders have their half year targets to hit and whilst funding might remain tight, the Council of Mortgage Lenders has reported that there may actually be more funding available than first expected.