How can we help you?
We invite you to get in touch via a free, no-obligation initial consultation.
Check out our Christmas Hours
We are not surprised at today’s decision by the MPC to hold the Bank Rate at 0.5% and it looks like lower rates are here to stay for the time being, given the uncertain economic outlook in the emerging economies, particularly China. At the beginning of 2015, the market was pricing in that interest rates would increase (to 0.75%) in the second half of this year at the earliest; now the second quarter of 2016 is looking more likely, given the Bank’s latest inflation report, Mark Carney’s recent comments and the most recent MPC minutes.
For those homeowners who are still concerned about future interest rate increases, it is important to remember that the market is predicting that the Bank Rate will remain below 2% in 2017 and 2018 and will probably reach a new long term average of 2.5% sometime after 2020. That is still half of what it was before the 2007-2008 credit crisis when the historical average was 5%. This means that if you are planning a property purchase you may do so with confidence; even if interest rates do start and continue to rise, where rates will settle would appear to be very much lower, even half long term historic levels.
For the very cautious, a secure option would be to look into 5 or 10 year fixed rates that are currently being offered at around 2.5%-3.5%; a clear reflection of how the mortgage market feels about long term rates.