Will the New Year see rates start to rise?

Monica Bradley from Kingswood Law comments on the latest Bank of England base rate decision.

Some forecasters have recently commented that with the economy remaining extremely weak, further support in the form of up to an additional £100bn through the Monetary Policy Committee’s “Quantitative Easing” (QE) programme may be required, but this remains to be seen. Unsurprisingly the outcome of the December Monetary Policy Committee meeting witnessed no change in the Bank of England base rate and the level of new money injected into the economy remains at £275bn.

Attention remains focused on the Eurozone crisis and in particular the discussions taking place to attempt to bring about stability to the debt crisis and to put forward and agree plans to stimulate economic growth.

In spite of all of this uncertainty, activity in the UK mortgage market has remained fairly consistent, with the number of purchase and remortgage borrowers only marginally lower than the previous month but in line with seasonal factors.  We continue to see borrowers favouring fixed rate mortgages with three quarters of buyers and two thirds of remortgage customers electing to fix their payments.

Lenders continue to offer low mortgage rates with Moneyfacts reporting that in December the average two year fixed rate is 4.24%, up by only 0.02% compared to November’s average.  However, the average five year fixed rate has fallen further to 4.58% from 4.67% last month.

Significant numbers of mortgage borrowers will be coming out their tie-in period early in the New Year.  However, the Bank of England has warned that with the wholesale cost of funds rising and lenders having to offer more attractive rates to encourage saver’s deposits, mortgage rates may start to edge up a little if lenders want to maintain their margins. Potential borrowers could benefit by taking some time to talk to an independent whole of market mortgage broker.

Monica Bradley is from Kingswood Law.  For further information on how the latest base rate decision affects you, please call 020 8643 7777.

With offices in the heart of Cheam Village, within walking distance of Christies’ Cheam office, and backed by a robust administration team, you can rest assured that you will be in safe hands when Kingswood Law takes care of your finances. As such, when you are considering purchasing a new home, remortgaging or buy to let, Christies recommends using Kingswood Law to ensure you find the best deal and the one most suited to you and your circumstances. In addition, Kingswood Law offers specialist advice on protecting your home, income and family, as well as a comprehensive estate-planning service*.

If you would like further information about their services please call 020 8643 7777 or visit www.christiesworld.com and click on Financial Services.

Christies Estate Agents work in close association with Kingswood Law to offer its customers unbiased independent mortgage advice.

*Estate Planning services are provided by the Countrywide Group. Your home may be repossessed if you do not keep up repayments on your mortgage. A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £95. Your home may be repossessed if you do not keep up repayments on your mortgage.

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