With the Bank of England setting rates at an historic low of 0.5%, there couldn't be a better time to search for the best UK mortgage rates. Those who are uncertain whether to enter a new fixed-rate mortgage or continue with a base rate tracker will be be heartened by the latest piece of research.
According to the Centre for Economics and Business Research (CEBR), rates are likely to remain at 0.5% until 2011. Furthermore, they expect the Bank of England to keep rates below 2% until 2014. This means that home mortgage refinancing rates will remain very low for the foreseeable future.
Why Home Mortgage Rates are Likely to Stay Low
- Over £100 billion will be removed from the economy through a combination of tax increases and public spending cuts. While this will help to reduce the UK's deficit, it will also slow down economic growth. This will reduce the need to raise rates.
- Unemployment has continued to rise and currently stands at 7.9%, up 0.7% on the quarter. The Confederation of British Industry (CBI) expects the rate to rise to over 3 million by the end of 2009. This will reduce tax receipts, consumer spending and prevent home refinance as lenders will not loan money at the best rates to people who aren't in stable employment.
- Although property prices have risen in recent months, this trend is unlikely to continue. According to a report by Fitch Ratings in October 2009, house prices have a further 17% to fall. Howard Archer, the chief UK and European economist at IHS Global Insight, stated that: "Despite further likely gains in the very near term, we suspect that house prices will be prone to significant relapses and will probably be no more than flat overall between now and the end of 2010."
How to Get the Best UK Mortgage Rates
While current mortgage interest rates are very low, it's still necessary to search the entire market. This can be achieved by utilising the services of a mortgage broker or using an online comparison service. Don't just settle for a deal offered by your bank.
Although current mortgage interest rates are at an historic low, the opportunity to cheaply refinance is unlikely to be lost by delaying the decision for a few months. Given the dire state of both the British and world economy, the low rate mortgages are likely to be available for the foreseeable future.
Sources:
"Mortgage rates to stay low until 2014." The Daily Telegraph.
"Labour market statistics." HRM Guide.
Monaghan, Angela. (October 8, 2009). "House prices have further 17pc to fall." The Daily Telegraph.
Hopkins, Kathryn. (16 February, 2009). "Unemployment forecast to reach 3 million before next election." The Guardian.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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