THE PROPERTY EXPERT

Save me for a rainy day

ALMOST a fortnight ago now, the Monetary Policy Committee voted unanimously in favour of lowering interest rates to 0.25%. Media reaction has been very much in accordance with whichever way they leaned on the EU remain or leave decision.

Reading through the minutes of the meeting that lead to the decision, however, it is quite obvious that there is much uncertainty about the future and the right actions to steer Britain through this period of change.

The intent of the measure is essentially to stimulate activity in the economy. With lower interest rates, borrowing for mortgages should be cheaper, and those with existing mortgages should on average save £22 per month as a result.

This should be welcome news for those looking to get a mortgage, as in theory lending rates should improve, and Mark Carney said banks had no excuse but to pass on the rate cut to customers.

Customers with variable rate mortgages should see a reduction by September or shortly thereafter.

For anyone with savings in the bank, it has been for some while now that rates have been reducing further and further, such that at this point many lenders offer 0% on easy access accounts.

Hardly an offer you couldn’t refuse. In fact, for every savings rate that has increased this year, nine have been reduced!

Interest rates look set to remain low now for many years to come, and banks are in a race to the bottom to make savings attract less interest, so now is time to look at moving investments into assets that will deliver returns.

Lenders should soon start bringing offers to the market that take into consideration these reduced rates, potentially we could see offers as low as 1.5% interest on a mortgage, which the government hopes will boost the property market.

All these conditions support a property market with an upward price trajectory, which is why we believe that more investors will be moving money from the bank and into property.