Harefield Gazette - - UXBRIDGE PROPERTY -

Times re­por ted re­cently that home own­ers, who had braced them­selves for an im­mi­nent in­crease in mor tgage re­pay­ments, have been given a re­prieve.

The Bank of Eng­land has re­it­er­ated that in­ter­est rates will only rise grad­u­ally, when they even­tu­ally do, and an­a­lysts have con­cluded that this will not be­gin to hap­pen un­til next year.

Com­ments from Bank of­fi­cials after this quar ter’s in­fla­tion re­por t sug­gested there was lit­tle chance of a rate rise in the next four months, calm­ing ex­pec­ta­tions among econ­o­mists of a rate rise this year.

Mark Car­ney, gov­er­nor of the Bank, em­pha­sised the im­por tance of earn­ings growth just as the Bank cut its fore­cast for wage growth this year by half – from 2.5% to 1.25%.

He said: “In­ter­est rates can be ex­pected to in­crease as the ex­pan­sion pro­gresses but, given the broad forces act­ing on our econ­omy, the nor­mal in­ter­est rates of to­mor­row are likely to be lower than those of yester year.”

Ray Boulger, of in­de­pen­dent mor tgage ad­vis­ers John Char­col, said, “The im­por tant thing for bor­row­ers is not so much whether the first in­crease is this year or next, but that it will be slow. Even on a five-year time hori­zon we are look­ing at a ‘new nor­mal’ of three per cent.

“We won’t see many fixed-rate mor tgages go up in the shor t term; we may even see more re­duc­tions.”

Ex­per ts have pointed out that, as the prospect of a rate rise this year dis­ap­pears, cer tain tracker and vari­able rate mor tgages now look at­trac­tive com­pared with fixed-rate deals as, un­like fixed-rate mor tgages, life-time track­ers and vari­able deals are widely avail­able with­out penal­ties on bor­row­ers who want to re­pay their loans early. Re­search by data provider Money­facts shows the av­er­age rate on a two-year fix at 75 per cent loan to value is the same to­day as it was a year ago, at 3.46 per cent and that up­takes on five-year fixed deals, which pro­vide greater se­cu­rity, are ris­ing.

“With many now pre­dict­ing a ‘later than first thought’ base rate rise, some providers have star ted re­duc­ing their mor tgage rates a lit­tle,” said Char­lotte Nel­son, of Money­facts. “Bor­row­ers need to bear in mind that they don’t need to see a base rate rise to in­crease the cost of mor tgages – there are other in­flu­ences at play.”

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