The Bank of England Governor Mark Carney has confirmed that although unemployment is fast heading towards its trigger point of 7%, lack of growth in other sectors of the economy means the Bank of England base rate is unlikely to rise when it finally does hit 7%.
He did say that when rates do eventually start to increase, the base rate will only rise gradually and even when the economy returns to normal it is likely to be substantially below 5%.
Mr Carney said that the recovery means that by around 2017, the bank rate will settle somewhere between 2 and 3%.
Social media, the press and other market commentators immediately picked up the headline of “Rates rising 6 fold in 3 years,” but as I pointed out to the younger members of staff at Mortgage Required (some of whom were still at school 5 years ago when rates fell to their all-time low!) 6 x ½% is still only 3%!
Anyone who had a mortgage in the early 90's will remember the pain of interest rates around 15%, so I am sure they will eat 3% up for breakfast!
From next month, new regulations will mean that lenders will need to factor in rises in interest rates when they agree new applications, so in theory a 6 fold rate increase should not really hurt anyone.
His comments will no doubt mean mortgage borrowers will edge towards fixed rates, which are still extremely competitive. It may even wake up borrowers on “lifetime trackers” who have been paying naught point didly squat in interest for 5 years. Be warned, 0.5% will not last forever!
For more information or to speak to an adviser contact us on 01628 507477.
Recent posts
Keeping the kids entertained over the six-week summer holidays isn’t always easy, especially with the cost-of-living making it even more difficult. Below is a list of fun, inexpensive ideas to do over the break
The Financial Conduct Authority (FCA) has published a discussion paper about the future of the mortgage market in a bid to improve access for first -time buyers, self-employed, and those borrowing in retirement.
Ever wondered where the most reasonably-priced towns for families to buy are? Property company, Zoopla has identified the top 10 towns for families to live in the UK by looking at the most affordable towns, and how many people are looking in that area.
Increase in zero-deposit mortgages in 2024
22 days ago
There was a 32% increase last year in 100% loan-to-value (LTV) mortgages which are mortgages that require zero deposit. According to a recent report by chartered accountants and business advisers, Lubbock Fine, the reason behind this is buyers simply struggling to save enough for a deposit.
Average savings by age in the UK
23 days ago
Many people are quite private when it comes to what is in their bank account. In this short blog, we look into what Brits have saved by age group.
Research from buy-to-let lender, Landbay, shows that UK landlords are looking at raising rents ahead of the Renters' Rights Bill which is due to come into force this year.
Data shows landlords could miss out on green mortgages due to expired energy performance certificates.
Buying a house is a big deal, and where you are planning to buy will make a difference financially. In this short blog, we look at the most affordable and most expensive areas and how much you need to be earning to buy in there.
More information
Trusted by
