It is a very turbulent season for mortgage lenders and economists are predicting that mortgage rates will stay low as your bank of England Base Rate is expected to remain unrevised at a record low of just 0. five per cent. economist steve rattner
Economists are not always right in their forecasts, however if they happen to be correct this time, what does this mean for the basic public and business owners?
As the Rate has been so low for this record timeframe, the BBC recently asked if some of the leading economists (32 in total) for when they foresee the camp Rate will finally be raised up to a more acceptable number.
The feedback from over two thirds was that the speed will not climb this year this summer and three even made the prediction there would be no change until 2013. Just below half of the economists all expected a positive change in the Base Rate by the first quarter of 2012 which is a lot more appealing prediction to consider.
Furthermore 16 of the economists predicted that they would expect the likelihood of a rise to at least 1. five per cent by the ending of 2012, which is still a far cry away from the 5% it was before the global financial trouble set in.
So what does this mean for markets and for common people in the UK?
The mortgage market stands to be hit quite hard when the BOE Charge does eventually rise as variable mortgages, tracker loans and discounted rates that are incredibly cheap will abruptly shoot up and any fixed term deals will also be impacted with inflation.
New House Purchasers
Many lenders are providing 2 and 3 year system mortgage deals for brand spanking new house buyers which are all well and good; though the state of the home loan market in five years time is going to be a complete unidentified factor making any offer a potential risky investment.
Furthermore if the rate does within 2012 as some economists believe, then the tracker mortgage raises considerably which gives you simply a few months at the low rate. In the event you have a restricted budget it is always a safer option to go with a lasting predetermined mortgage deal as you will know with full confidence you can afford the monthly payments every month.
If perhaps the Base Rate will rise then this will be very positive for UK savers and the savings market on the whole following this market has seen this appallingly low rate within the past several years. Due to these low rates many savers have been put off giving their cash in banking companies, however with the actual Bottom Rate rise coming it could be time to begin considering investing your money back into bank personal savings. In the short term look to only devote to a fixed you year account until the exact Base Rates surge is known as this will allow you more versatility if the rates do rise in early on 2012.