10
Sep
Bank of England decision to affect mortgages
The Bank of England's decision to keep the base rate at 0.5 per
cent is likely to affect which mortgage product homebuyers looking
to purchase a house for sale in the UK will choose.
Yesterday (September 9th 2010), the Monetary Policy Committee
decided to keep the base rate unchanged for the 18th consecutive
month, leaving homeowners unsure of whether to take out a
fixed-rate loan or a tracker mortgage.
Ray Boulger, spokesman for mortgage adviser John Charcol, suggested
that while there has been an increase in the number of fixed-rate
loans taken out over the last few months, mortgage providers have
put introduced rates for a two-year period.
He recognised there "has been relatively little action in the
five-year market", as people do not know how long the Bank of
England base rate will remain at this level.
Although people might be tempted to take out a tracker loan if the
base rate continues to stay low, Riach Independent Financial
Advisers' Rob Riach suggested that interest repayments could
increase dramatically "within a year or two".
He said that while they remain reduced at the moment, they "will
not stay this way". 