04.08.11 by Andrew Montlake
No change on the base rate front but mortgage rates continue to fall
I suppose we should start with the obligatory observation that the Bank of England Monetary Policy Committee has decided to keep Bank Base Rate unchanged for yet another month. One day we may be caught out and surprised, but by all accounts this day is getting further away.
Given the turmoil that is the Eurozone at present, with Italy and Spain on a proverbial knife-edge putting real question marks over the Euro’s very future, plus signs of a further decline in the US exacerbated by the tragic-comedy of the Tea Party’s recent antics, the FTSE fell by its biggest margin in 8 months yesterday.
So, whilst everyone knows that the next change in interest rates will be upwards, a weakening economy could mean that we could be seeing a further round of Quantitative Easing before we see a rate rise.
As for the timing, well in the BBC’s latest survey of various Economists (it seems we are all Economists these days!), the highest proportion believed rates will finally rise in the first quarter of 2012, whilst 6 out of 32 believed we will still get a rise of some sort by the end of this year.
As a matter of comparison, albeit a highly volatile one, interest rate futures now point to March 2013, although it should be remembered that only a few months ago they suggested a rise was imminent.
In reality, most commentators have found it difficult to predict with any degree of accuracy, but to be fair events keep changing at a swift pace (that’s my excuse).
Although the worry is that high inflation becomes embedded in the system and the oft quoted Taylor Rule suggests that we should now have interest rates up at around 4%, people such as arch-dove Adam Posen continue to call for more QE and is so convinced that inflation will fall to 1.5% by next summer that if it doesn’t he will walk!
All of this means that Swap rates have continued to fall, with 5 year Swaps down to around 2.23% from 3.40% in January.
This is why we are seeing the lowest rates anyone can ever remember, with fixes now starting at 2.39%, (5.40% APR) for 2 years, 2.99% (3.50% APR) for 3 years and 5 year fixes available at an astonishing 3.39% (5.00% APR).Fixing it seems, could well become the new tracking!
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Monty’s Mortgage Blog
18.05.12
Why Should A Borrower Choose To Use A Mortgage Broker?
There still seems to be a general misconception of what a mortgage broker actually does. Any brokers can tell you in seconds what the cheapest rate in the market is and, at various times, this will vary between a direct to lender product or a broker only deal, but this misses the point. Can this product actually be attained and is it the best to fit your personal circumstances?
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