Interest Rate Commentary

Before selecting a mortgage product it is worthwhile looking at likely interest rate trends:  The Bank of England left its target for asset purchases steady at their January meeting despite an escalation in the euro zone debit crisis.  The central bank restarted its quantitative easing programme in October with a plan to buy a further £75 billion of government bonds over the coming months.  Many analysts believe the Bank will soon be forced to inject more stimulus.  Interest rates remain on hold at 0.50% with many pundits now predicting rates will not rise until 2013!

In these unprecedented times it is difficult to be definitive when recommending which products offer the best value.  Arrangements linked to base rate offer excellent short term value but clients must remember that rates are likely to increase once the economic recovery gathers pace. Redemption penalties and tie-ins should be avoided if at all possible. With fixed rates at or close to the bottom of a cycle there is now an excellent opportunity to lock in to highly competitive products either short or long term.