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
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
The UK mortgage market is seeing lenders withdraw deals and hike mortgage rates amid the escalation of conflict in Iran. This isn’t great news for borrowers, with the average rate for a two-year fixed deal sitting above 5%.
Statistics now show that those looking to purchase a property would have to save a deposit bigger than their annual gross pay.
Analysis from the Office for Budget Responsibility (OBR) shows that those looking to buy their first home could face a sharp increase if house prices follow the latest predictions, as Coventry Building Society suggests.
According to Zoopla, four in 10 homes are now cheaper to buy with a mortgage than to rent due to lower-cost mortgages - a sign that ownership is becoming more affordable.
World Sleep Day Tips
13 days ago
There are many people who struggle with getting a good night’s sleep. Having poor sleep hygiene can be the reason for bad sleep quality in adults. Sleep hygiene refers to habits that can help you sleep better.
Here we have shared some tips to create a healthier sleep.
What you need to know about remortgaging
15 days ago
If your current fixed rate is due to come to an end within the next six months, you will want to start thinking about the options available to you.
Nationwide is the first lender to allow mortgage deeds to be signed electronically and without the need for a witness.
More information
Trusted by
