Selling December 1, 2015

Interest Rates to some point

The hot topic of the moment is once again when will Base Rate start to rise.  That was stoked up initially by the comments by The Governor of the Bank of England that the need to consider an increase would come into “sharper relief” around the turn of the year.

The August meeting of the Monetary Policy Committee saw one member vote for a rise of 0.25%, although that was heavily outweighed by the eight that preferred to once again hold the rate at its current record low.

Although there may not be an imminent change to the Base Rate it underlines once again that the current ultra low rate of 0.50% cannot stay that low forever.  Even though most expect that any change will not be forthcoming until next year mortgage borrowers should still be considering their options now.

As expectation of a rate move heightens the funding cost for lenders is lifting and we have already seen some fixed rate deals edging up as a result.  Although the market remains extremely competitive, which helps to keep rates attractive, lenders can only deal with higher costs for so long.

Some major lenders have increased some of their fixed rates already and some of the very lowest fixed deals have gone.  Borrowers that fail to take action until the Base Rate has risen should expect to find that the lowest fixed rates will have already gone.

There’s no need for panic just yet as rates are still very competitive and the Governor has again emphasised that even when rates do start to rise it will be a gradual increase rather than rocketing costs.  Nonetheless, anyone that is considering the benefits of locking into a fixed rate may want to review their options now.

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