Mortgage market experts have predicted that the base interest rate will remain at 0.5%, a record low, until at least 2014. Further reports even suggest this historically low rate will remain for potentially three to five years.
Most experts agree that there did not appear to be a sufficient improvement in the economy to allow the monetary policy committee (MPC) to rise the interest rates in the foreseeable future.
Robert Gardner, chief economist at the Nationwide building society said that the economic climate had fluctuated so much recently that the MPC could not gauge whether they could raise the interest rate. He did, however say that the volatility would be exacerbated by the 2012 Olympics and the diamond jubilee.
The Bank of England will want to make sure [the economy] is really gaining momentum before it risks raising interest rates he said.
Mark Harris, chief executive of mortage broker SPF Private Clients said he didn’t expect a rise until 2014/2015 because of the dire state of the UK economy.
Ian Fishwick, a fixed income portfolio manager at Fidelity International, said he was not expecting the interest rates to rise until 2014: I think [rates not rising] for three to five years is entirely plausible, although a two-to-three year horizon is more likely. If the UK stays in the doldrums, rates wont be going up any time soon.
Mortgage rates are often an excellent indication of how the base rate will change, and recent figures published by Moneyfacts show that show the average cost of a five-year fixed-rate loan has failed from 5.59% to 4.86% in the past year.
The base interest rate has been at 0.5% for more than three years now, and has been providing relief for borrowers who have mortgage tracking base rate, but on the hand, it has been making it difficult for older people to rely on savings for income.
However based on industry predictions, it remains a good time to take advantage of the low base rate so speak to one of our advisors as to what rates may be available for you.