Earlier this month the Governor of the Bank of England, Mark Carney hinted that interest rates could rise as early as the end of this year.
In his speech Mr Carney said that it didn’t seem unreasonable that once normalisation begins, rates will increase slowly and gradually from their current level of 0.5 per cent to around 2.25 per cent – still way way below the historical average interest rate of 4.5 per cent.
Well Mr Carney, it doesn’t seem unreasonable to me either, I remember the 90’s when rates peaked around 15.5%!
Although the Monetary Policy Committee usually consider economic activity, household debt and core inflation when adjusting interest rates. Throw the cost of oil bringing deflation down, trouble in the Eurozone and the distance between the two main parties here at home into the mix and I am not sure Mr Carney will get the normalisation he is looking for by Christmas.
In the meantime, its business as usual for the country’s major mortgage lenders, who seem to have largely ignored the warning. Fixed rates remain stubbornly low at circa 2% for 2 years and 3% for 5 years. If you are not intending on changing your house or spouse any time soon, I would personally recommend Barclay’s 10 year fixed rate which comes in at an amazing 2.99%!
However, if you are still on a variable rate, you have been warned!!
For more information or to speak to a mortgage advisor contact us on 01628 507477.
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