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Borrowers can now benefit from the lowest mortgage rates in years, according to calculations from two well-known financial sites.
Research from Moneysupermarket.com suggests that increased competition between lenders has driven down the costs of both fixed-rate and tracker mortgages. This has left rates at their lowest level since the Bank of England cut its base rate to 0.5% in 2009.
A recent opinion poll suggests that more than a quarter (28%) of us believe interest rates have risen in the last 12 months, while a smaller proportion – 17% – think they have fallen.
The poll was conducted for the Bank of England, whose Monetary Policy Committee (MPC) has actually kept Bank rate (often called “base rate”) on hold at a record low of 0.5% since March 2009.
The Bank of England has kept interest rates on hold at 0.5% for the twenty-seventh time in succession – to the undoubted relief of millions of homeowners.
This month’s decision by the Bank’s Monetary Policy Committee (MPC) had been widely trailed, after a series of indicators suggested the recovery might by stalling. This week the International Monetary Fund (IMF) became that latest body to downgrade the UK’s growth forecast – to 1.5% – with the squeeze from cuts and tax rises expected to impact already weak consumer demand.
Lenders and house builders have been involved in secret talks aimed at easing the supply of mortgage finance, it’s reported.
According to The Times, leading house builders such as Taylor Wimpey and Barratt have been in discussion with the Council of Mortgage Lenders and major banks, including Lloyds and Santander.
A leading business organisation has warned that rises in interest rates are on the way this year.
The British Chambers of Commerce (BCC) predicts that the Bank of England will move to raise rates in August, in an effort to curb inflation. And that’s despite revised economic forecasts, with the BCC becoming the latest in a long line of organisations to downgrade estimates for UK growth in 2011 and 2012.
Mortgage borrowers could benefit from low interest rates for some time to come.
That seems to be the message of a number of developments this week – despite a surprise leap in inflation to 4.5% in April. Most recently, minutes of the MPC – the Bank of England committee responsible for setting the Bank’s base rate – show that members were again divided 6-3 on whether to raise interest rates.
Inflation has risen sharply, and that is bound to cause renewed speculation about a rise in interest rates.
The Consumer Prices Index rose to 4.5% in April – more than double the government target – having dropped back to 4% in March. The high price of energy and of imported commodities such as foodstuffs helped fuel the increase.
The first three months of 2011 saw something of a remortgaging revival, according to figures from the Council of Mortgage Lenders (CML).
Remortgaging accounted for 37% of all lending, up from 30% in the last quarter of 2010. March saw a significant boost for both remortgaging and lending for house purchase – with 33,900 and 37,800 new loans respectively.
Is an interest rate rise in the second half of 2011 now more likely?
As ever, Bank of England Governor Mervyn King played his cards close to his chest at the press conference following the release of the Bank’s latest Inflation Report. He repeatedly used words like “uncertain” and “uncertainty” to describe the economic course being charted by the UK.
It looks like there will be more opportunities for borrowers to find cheaper mortgage deals after recent decisions by the Bank of England.
Pressure on the Bank’s Monetary Policy Committee to raise interest rates has abated after inflation dropped back in March, while disappointing economic data from manufacturing and the high street has convinced many that an early rise in rates would put the recovery at risk.
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