Mortgage Advice: Future Trends in UK
July 6th, 2007 | by admin |Today’s rise in interest rates was the 5th increase in the past 11 months. It shows the MPC’s willingness to tighten Monetary policy to keep inflation within target.
Future prospects for Interest Rates
Interest rates could increase again this year. This is because of:
- Evidence that firms are able to increase prices at both the factory gate and to consumers.
- Evidence that UK consumers still retain a desire to borrow beyond their means. It is hoped that rises in interest rates will start to discourage prolific borrowing.
- The MPC is taking a hawkish stance regarding inflation
However, interest rates may have peaked this is because:
Past interest rate rises take time to have effect. In the next couple of months many homeowners on fixed rate mortgages will face much higher interest rates as they remortgage. This means that they could face an extra £100 a month. Therefore this will severely restrict consumer spending.
House price boom is coming to an end. Also, even though house prices are continue to rise, many are not spending more because they don’t expect the rises to be sustainable.
Is now A Good time to fix?
It is hard to say, but I would advise waiting because I believe next year, medium term interest rates are likely to fall. Next year, inflationary pressures are likely to be lower, due to the effects of interest rate rises this year and a housing market finally running out of steam.
Is now a good time to Remortgage?
It is always a good time to remortgage, if it means getting a better deal from a mortgage company