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
The government has announced plans to make buying or selling a home cheaper and quicker with what is being called the “biggest shake-up to the homebuying system in this country’s history.”
More borrowers using equity release
20 days ago
Almost one in five equity release mortgages are now taken out to provide financial support to family.
Buyers purchasing properties sooner
22 days ago
According to industry data, the expected wait for those looking to buy a property has dropped from just over 11 months to less than six months.
It is common for your first mortgage payment to be higher than your subsequent monthly payments for two reasons.
What to do just before you get your keys
27 days ago
Firstly, a big congratulations, you’ve now exchanged contracts! After weeks and months of waiting, you are about to move in. What should you do first?
The chancellor will deliver her second budget this autumn. Due to slow economic growth and high inflation, the government need to manage a £40 billion shortfall in public finances. There have already been reports about changes to taxes including income tax and capital gains tax.
Landlords could face a new tax this autumn
29 Aug 2025
The chancellor has advised that landlords could have another tax to pay this autumn as the Treasury decide whether to extend national insurance contributions to rental income.
According to a report in the Guardian, senior ministers have asked Treasury officials to look into a “proportional” property tax to see how it would work as an alternative to the existing stamp duty land tax on owner-occupied homes.
More information
Trusted by
