Economists in the UK can’t seem to agree when we’ll see the base interest rate rise. Many still feel that it would be good to maintain the historic 0.5% level as opinions are split as to whether the economy would be strong enough to handle a rate increase.
The Good News
With the Base Rate remaining at 0.5% for the foreseeable future, lenders are competing aggressively across all loan to values. Whether you are looking to purchase your first home, re-mortgage or move on to another property low rates mean cheaper monthly payments.
Property prices here in the south of England are showing an increase of 10% in the last year, which of course is great news for those who already own their property.
But the question is, what affect has this had for the people wanting to get a foot on the property ladder?
At the moment prices for fuel are down 10% on last year and food down nearly 2%. This obviously means that we have more money in our pockets and the ability to save more for a deposit has become easier for many.
Mark Carney governor of the Bank of England said recently that he still expects interest rates to “normalise”, or rise gently within the foreseeable future. However, my feelings are there is a possibility that the base rate will not change until some time after the upcoming elections.
- Bank of England governor Mark Carney
The Bad News
There is the possibility of ‘Deflation’, inflations ugly sister, where prices go down.
Deflation can be seen as positive in some aspects. However, if prices go down too low, then we will have a different set of economic problems to the ones we have experienced recently.
How Does This Affect Home Owners and New Buyers
I have always advocated that buying your own home is one of the safest investments you can make. Yes, property prices will fluctuate up and down, but that doesn’t mean it’s not a good investment if you’re plan is to buy for the longer term and not just a quick turn around to make a return.
The Bank of England will decide whether the base rate will go up this year or next, but regardless whether rates move within the next 12 months or so, this is a great opportunity for both First Time Buyers and particularly those who are ready to Re-Mortgage to take advantage and act now.
If you need any help or advice, please contact me or one of my team.
