The Bank of England has today announced it will keep interest rates at 0.5%, which will hold mortgage rates stable for UK homeowners.
Rates have now been held at this historically low level for 11 consecutive months, as part of the Bank’s plan to stimulate economic growth, complementing its programme of quantitative easing, by which £200bn has been pumped into the UK economy.
While the continuation of the 0.5% base rate is good news for mortgage holders, some mortgage lenders are already sceptical that the Bank will continue to hold interest rates down for the remainder of the year, given the relatively strong inflationary growth in recent months.
With inflation reaching 3.5% in January and 2.9% in December, some lenders are speculating that the Bank of England may well raise interest rates in the latter half of 2010, in an attempt to combat inflation.
As a result, these lenders have conceded they are already considering future increases in their own standard variable rates (SVRs) of interest, and that this is already being reflected in their calculations of ‘affordability’ when offering mortgage deals to customers.
Some lenders have stated that their restrictions on the amount of borrowings they are offering to those seeking first time buyer mortgages are based on the ability to repay “both initial and future mortgage repayments.” This means they calculate using SVRs much higher than the current average of 4.75%.
Customers seeking first time buyer mortgages are being advised to seek quality independent financial advice, as an independent mortgage advisor, with their ‘whole of market’ approach, can find the very best mortgages based on the whole of the UK market.
As independent mortgage advisors, Principle First has recently been able to source mortgage deals for a number of clients with rates of less than 2%. The Association of Mortgage Intermediaries has revealed that using an independent mortgage advisor will save an average of £963 on your annual mortgage repayments.
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