Interest Rates – Mortgage Rates
Bank of England Base Rate has remained at just 0.50% since March 2009, which has helped many people with mortgages – some have benefitted considerably. Those who have been on Tracker mortgages have gained the most, with some paying little or no interest at all!
All good things must come to an end and in the case of mortgage interest rates, the end appears to be in sight.
Speculation is growing that the Bank of England will start raising interest rates this spring after the latest government figures for the cost of living showed the annual inflation rate rising to 3.7% last month.
The New Year increase in VAT coupled with surging global commodity prices could result in inflation breaching 4% over the coming months, which is double the official target. This will put pressure on the Bank’s monetary policy committee to increase interest rates for the first time since the financial crisis erupted in the summer of 2007.
Although there are fears that an increase in borrowing costs will damage economic recovery, the financial markets are reported to expect the bank rate to increase from 0.5% to 1.25% in three 0.25% jumps by the end of the year. This would add about £40 a month to the cost of a £100,000 repayment mortgage on a 25 year term.
Of course, all of this is speculation and things may happen differently. However, many Lenders have already started increasing their rates, so we may well have already seen the lowest mortgage rates.
The big question is; should you be seeking a Fixed Mortgage Rate now or wait a while longer to see how this current situation plays out? It is very similar to trying to time stock market investments by getting in at the ‘bottom’. As far as mortgage rates are concerned, have we just gone past that point?
Surely now, more than ever, is the time to seek impartial Independent Advice – we can help you find the best mortgage rates.