08.10.09 by Rob Gill
Bank of England base rate held at 0.5%
As widely expected, the Bank of England have left base rate unchanged at the historically low level of 0.5%. Despite some speculation regarding Quantative Easing, the Bank decided to continue with the current £175bn programme, although a further £25bn later this year cannot be ruled out.
Elsewhere in the world however base rates have started to rise for the first time since the global recession began. Israel raised their central bank rate by 0.25% in August, far more significantly the first G20 nation has now followed suit with Australia also raising by 0.25% to 3.25% this week. With economic recovery already underway in the Eurozones two largest economies, France and Germany, the European Central Bank may also starts to raise rates in early 2010, while in the U.S. Federal Reserve official Thomas Hoenig has said the central bank should start to raise rates “sooner rather than later”.
Although most commentators still believe UK base rate will stay at 0.5% deep into 2010, especially with decreased government spending now firmly on the agenda of all 3 major parties, rate rises elsewhere could make this stance increasingly uncomfortable for the Bank of England. Relatively higher interest rates in other countries put pressure on an already weak Pound, which in turn adds to inflation, both of which could force the Bank’s hand sooner than they might like.
This week has also however seen the return of some genuine competition to the mortgage market, with lenders seemingly releasing new rates daily in an effort to scramble over each other to the top of the best buy table (something we’ve not seen for some time!). This rather perverse stance is explained by the fact that, although rates increase as economic recovery gathers pace, so too does confidence, including confidence to lend which is helping free up global credit markets, as shown by record low Libor and sharply falling bond yields. One of the highlights is a 2 year fixed rate @ 3.75% with a low fee of just £595 and fully flexible features.
For further details on this and other highly competitive products please contact your adviser direct or call us on 020 7856 2454.
Monty’s Mortgage Blog
19.08.10
Mortgage Lending Up...A Bit
Today saw the release of the latest set of data from the Council Of Mortgage Lenders, (CML) stating that Gross Mortgage Lending rose by 5% in July compared to June, although this is still 3% down from July 2009.
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