Good news for home buyers in Camberley and surrounding areas.
The Bank Of England have held interest rates.
As most economic forecasters predicted, the Bank of England have once again held the line on interest rates. So the cost of borrowing remains at 0.5 per cent, the record low first introduced in March 2009 alongside a £375bn quantitative easing programme designed to stimulate economic growth.
However, most experts now believe the strong economic recovery over recent months will soon force the Bank to adjust its own forward guidance to avert an imminent rate increase – maybe as early as next month. Having pledged, in 2013, not to contemplate any rise in interest rates until unemployment fell below 7 per cent – which the Bank predicted was unlikely to occur before 2016 – Bank governor Mark Carney now sees unemployment falling at a faster pace than was anticipated back then.
Economists judge this unemployment target – already at 7.4 per cent in October – will be down to 7 per cent ‘in the early months of 2014’. Scotiabank’s Alan Clarke predicts that, with unemployment ‘falling like a stone’, there will soon be a response, adding: ‘As a result, the Bank is likely to modify its forward guidance policy – lowering the threshold to 6.5 per cent – most likely at the February inflation report.’
As the recovery gathers momentum, many fear borrowing costs may rise, despite the Bank’s commitment to a period of low rates. Jeremy Duncombe, Legal & General’s Mortgage Club director, warns that ‘speculation around the future trajectory of (the) base rate continues,’ adding that borrowers, therefore, ‘should not be complacent.’ Acknowledging that many finance experts presently expect a rise to come in 2015, Duncombe nevertheless points out that, in reality, ‘lenders will price in a base rate increase well in advance of any decision.’ His advice is: ‘Borrowers should look at their options and where possible seek advice to tie down a more favourable deal while they still can.’
If such forecasts hold good, homeowners in Surrey and Hampshire could expect the minimum mortgage repayment on an ‘average’ UK property worth £150,000 to increase by up to £750 over one year with a base rate rise of just 0.5 per cent.
Sounding slightly more optimistic, Santander UK’s chief economist Barry Naisbitt considers that though unemployment is ‘approaching the policy threshold quickly,’ inflation has reduced and is ‘a whisker away from the 2 per cent target.’ Consequently, Naisbitt believes, the Monetary Policy Committee ‘has scope to hold rates at their current level for some while longer.’
