Interest Rate Commentary

Before selecting a mortgage product it is worthwhile looking at likely interest rate trends; the Bank of England’s Monetary Policy Committee voted to hold it’s benchmark rate at 5.00% at their September meeting.  The decision had been widely predicted by economists as inflation is still someway above the Central Bank’s target and likely to go higher, in the short term.  However, falling house prices, crumbling consumer confidence and other signs pointing to a sharp economic slow down are expected to make the bank’s job difficult over the coming months. 

The UK’s Bank base rate is still the highest amongst the group of seven nations and rate cuts cannot be ruled out during the remainder of the year as the Bank steers a course between inflation and economic growth. In this current interest rate environment we are recommending clients to consider shorter term products which often offer the deepest discounts, preferably without redemption penalties but definitively without tie-ins.  Current pricing also makes some lifetime products attractive together with longer term fixed rate products, which offer reasonable value if security is a priority.