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Interest rates have been kept on hold at 0.5% for the 26th time by the Bank of England’s Monetary Policy Committee – with few expressing much surprise at the news.
In recent days fresh doubts have surfaced about the UK economy. With consumers voting with their wallets, surveys have told a tale of slowing growth in sectors such manufacturing, construction and services.
It seems that even the Royal Wedding is unlikely to put the zip back into the UK economy. And that means that interest rates are set to be kept on hold yet again this week.
Consensus is growing among economists that the recovery is still too fragile to risk a rate rise while others think the economy’s lacklustre performance means that inflation will drop of its own accord.
The number of loans approved by the banks for house purchase rose in March, according to the British Bankers’ Association (BBA). The total increased by 5% to 31,660 – the highest figure for eight months.
Net mortgage lending – taking into account repayments of loans in another words – was also 2.3% higher than a year ago, despite a weak performance in March as borrowers sought to repay debt.
The UK economy is growing again – though not by that much.
GDP (what the UK produces measured in cash terms) was up by 0.5% in the first three months of 2011. The news came as a relief after the last quarter of 2010, in which the economy shrank by a similar amount. According to some analysts, the figure is in line with a reasonable recovery – given circumstances which include big public spending cuts.
Thinking of remortgaging? You could benefit from falling interest rates as a price war develops among the UK’s leading mortgage lenders.
That’s the analysis of industry insiders as the prospect of an early rise in Bank Rate recedes.
It’s cheaper to buy a home than to rent a comparable property, according to latest research.
Figures from Halifax Bank show that mortgage payments and other costs on a three-bed property total £608 on average. Renting a similar house would cost £706 a month – £98 more.
The UK mortgage market is recovering – but it’s a slow process. That’s the message from the Bank of England’s latest Trends in Lending report.
Compiled partly from data from banks and building societies, the report shows stability in mortgage lending over recent months, coupled with signs of increasing competition.
Could falling inflation and a sluggish economy lead to a shift in mortgage options?
It’s a question on the minds of observers after the Consumer Prices Index dropped back to 4% in March, leading to speculation that interest rates might stay at historic lows for months to come.
Opinion remains sharply divided about interest-rate rises.
Recent Bank of England decisions leaving rates unchanged have been greeted with sighs of relief from mortgage borrowers. Business leaders too have been loud in their calls to keep rates on hold. But analysts feel that the Bank’s Monetary Policy Committee (MPC) risks losing credibility if it fails to act soon – while the City has already built rate rises into its calculations.
Some mortgage deals could become cheaper after recent movements in the money markets. Longer term fixed-rate deals in particular may become more competitive.
At the start of the year there was something of a race to remortgage – with fixed- rate deals attracting particular attention. As speculation grew that interest rate rises were on the way, such deals became relatively more expensive, with some fearing they had missed the boat as far as the lowest rates were concerned.
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