Archive for the 'Interest Rates' Category |
The Bank of England has again decided to keep its base rate at 0.5% following today’s meeting. Even though inflation is over double the target of 2%, the lack of movement was widely expected since the economy is still only growing very slowly. It is expected that the first increase will not be until 2012.
The base rate has been at 0.5% since March 2009 when it was dropped by 1%.
Ben Thompson, managing director of Legal & General Mortgage Club, says: ?Our view remains that rates will stay unchanged for the remainder of this year and in all likelihood won?t rise much anytime soon, as we expect inflation to fall back sharply next year, albeit remaining a little above the Bank?s 2% target.
The news probably makes little difference to many house owners and potential buyers since mortgages are still hard to obtain, and interest rates still signifcantly higher than the base rate.
Ewan Edwards, head of retail products at Norwich & Peterborough, reminds consumers that ?while keeping the rate so low is helpful to borrowers, they should be mindful that there is likely to be a rise over the next six to twelve months, so this simply gives them a little more breathing space to review their mortgage and maybe consider finding a good fixed rate deal.?The Bank of England has recently voted to keep the base rate at 0.5% – despite the fact that inflation is currently at double the target rate. This brings the 0.5% run to 2 years, although last month’s votes (three members voted to increase the rate) lead many commentators to predict that this month might be the month of the first rise.
Although the low rate is good for mortgage holders, it does mean that inflation is quite high. Mortgage rates are also still high compared to the base rate, with fixed rates under 5% only available to those with a sizeable deposit available.
The nine members of the Bank of England’s Monetary Policy Committee, which decides the base rate, have made their votes for December, and the rate will be kept at 0.5% for the 21st month in a row! Recent voting results would point to the rate staying at 0.5% for the foreseeable future since only 1 member voted for a rise in the rate.
As always though, despite the low base rate, mortgage rates are still several percentage points higher, and mortgages are still relatively difficult to obtain – even for those with a spotless credit rating.