The Bank of England decided to increase the interest rate last week from 0.25% to 0.5% and this news will not have passed you by unless you have been living under a rock all week. Yes those pesky folk on the Monetary Policy Committee decided to ignore my sage advice and put the rate up.
The media flew into a frenzy, “rates have gone up for the first time in ten years!”, which is true of course. Lets get a bit of perspective though, they may have doubled but they have gone from extremely low to very, very low (working on the basis that very very is not as low as extremely!).
Please do not all panic with fear of 80’s/90’s style interest rate highs. If that happens we are all screwed and I cannot see the Bank of England putting us all in the poor house.
Lenders have been pulling their lowest ever fixed rates but they haven’t then subsequently gone up by 0.25%, more like 0.05% to 0.1% so you can still get some great deals. With the right amount of equity/deposit you can secure a five year fixed rate at below 2%, and this is very competitive if you are looking for that sort of security.
I still stand by my previous musings that interest rates will only go up to pre-2008 levels in the event of a booming economy with huge wage growth and minimal unemployment. The future outlook I think is so uncertain that to put rates up any further in the near future seems unlikely.
The base rate sat at 0.5% from March 2009 to August 2016, a long time and I can see another three or four years with the rate not going above 1%. The highest the rate has been since 1999, significant as my first year as a mortgage professional, has been 6%. I think all of the above and my previous wise words should hopefully give you some reassurance that the interest rates are not about to go crazy.
As always, if you want to have a chat about mortgages, interest rates and anything in between, you know where you can find me! Call 020 3355 4841 or email firstname.lastname@example.org