Interest rates held for another month
The Monetary Policy Committee (MPC) today announced that interest rates would be held at 0.5 per cent for another month. This means that interest rates have been held for 26 months in a row.
Earlier this year, many economists forecast that rates would rise in May. But weak economic growth of 0.5 per cent in the first quarter and a slight decline in inflation have pushed back most forecasts.
Roger Bootle, economic adviser to Deloitte, has gone as far as declaring that he doesn’t expect interest rates to rise until 2013, with rates on hold throughout this year and next. This is an extreme view, however, with most economists, and Private Finance, expecting interest rates to start rising by September. Borrowers should not be complacent as interest rates will rise at some point so they must be prepared.
The good news is that Swap rates – the rate lenders pay to borrow from each other – have been falling in recent days, so the pricing of new fixed-rate mortgages is likely to fall further. Borrowers requiring the certainty of a fix will find that they are becoming increasingly affordable, particularly for those with sizeable deposits or equity in their homes.
Those who don’t need the certainty of a fix but who are prepared to gamble on a tracker, will find rates are cheaper still, at least initially. Two-year trackers start at just 1.99 per cent for those with a 40 per cent deposit or equity in their home.
Speak to Private Finance for more details of the options available.