Although the Bank of England’s’ Monetary Policy Committee, (MPC) have yet again decided to keep Base Rate on hold, the internal splits within the committee seem to remain with a 4 way split according to the minutes of the last meeting.

Whilst the debate rages on, recent research conducted by the BBC reflected the differences within the MPC. Of 22 economists who were asked “In which month do you think the MPC will raise interest rates?”, 14 said August, 4 plumped for May and 1 each reckoned on June, July, November and February.

The follow up question, “What level do you think interest rates will be at by the end of the year?” prompted 12 to say 1%, 6 were at 1.25%, and 1 believed they would be up at 1.3%.

Many in the City have reportedly now tempered their interest rate expectations, reflecting the view that a summer rate rise is potentially now the only one expected this year. Any further moves will depend hugely on future inflation and growth reports, with the August inflation report predicted to be a key driver.

The issues for the average householder have not changed and with many feeling the squeeze on their real incomes, whilst an initial rate rise of say 0.25% as a shot across the bows may not cause a major issue, any subsequent rise will start to hurt a good many very quickly.

The good news, as far as mortgage borrowing is concerned, is that there is a light at the end of a very long tunnel for those with property owning aspirations.

Mortgage lenders are beginning to relax slightly and there is now a smattering of products available at 90% Loan-To-Value, with at least one lender offering 95%. Whilst the cost of these deals may seem expensive compared to the historically low Bank Base Rate, historically speaking these are pretty well priced.

Quite a  few lenders have reduced their rates further and whilst tracker products continue to look attractive, there are still a good many borrowers who should be looking at competitive fixed rate options rather than trying to “beat” the market. The price of security should not be underestimated.

For those with a 40% deposit or equity, you can obtain a discounted variable rate as low as 1.99%, (2.9% APR), whilst tracker products with no penalties are available at just 2.35%, (2.40% APR).

Fixes start at 2.79%, (4.20% APR) for 2 years, 3.59% (4.80% APR) for 3 years and 4.39% (4.30% APR) for 5 years.

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