Interest rates could plummet next year according to officials
November 11, 2008
Over the past couple of years interest rates have soared to 5.75%, leaving many homeowners struggling to keep on top of their mortgage repayments and resulting in an increase in repossessions. Homeowners were therefore relieved when in December of last year the base rate started to come down, and between last December and April of this year the base rate fell three times by 0.25% each time, taking it to 5%.
Due to the fear of recession, the ailing economy, and low consumer confidence the Prime Minister Gordon Brown and the Chancellor Alistair Darling announced earlier this month that they were cutting the base rate by another 0.5% a day ahead of the scheduled Monetary Policy Committee meeting, taking the rate of interest to 4.5% - the rate at which it stood before the rate rises began in August 2006.
Industry officials have also predicted that over the next year interest rates are likely to keep on falling, and could drop as low as 2.5% or even 2% over the next twelve months. Some have also predicted that the rate of inflation, which has soared way above the government’s 2% target at 5.2%, could also fall below target to 1% over that period of time.
One industry official said: ‘In a sense, it will be too little, too late because it will not stop the economy from heading into a pretty deep recession. They wanted a slowdown in the economy but it is becoming clear that the downturn is deeper than they intended.’
If the interest rate does fall by this level homeowners with variable rate mortgages could see a huge drop in their monthly mortgage repayments.
- Increased stability for mortgage product numbers on market Since last summer when the global credit crunch swept across the UK the number of mortgage products available on the market has plummeted, with many lenders having to take a wide range of products off
- Low fee mortgages from Abbey for those with sizeable deposits Over recent months a number of lenders in the UK have increased the mortgage arrangement fees on their mortgage products, and this has seriously affected the ability of many people to afford to take out
- New service launched for consumers looking for mortgage advice In the current financial climate many people that are looking to take out a mortgage are also looking for quality financial advice from an experience, qualified, and trained industry officials to help them avoid making
- Offers on properties being dropped just prior to exchange A recent report has highlighted a problem that many homeowners are now experiencing, with the housing market having swung abruptly from a sellers market to a buyers market. Many homeowners are now experiencing difficulties in
- Homeowner that bought properties within last four years could face capital loss According to a recent report homeowners that purchased their properties under four years ago are worst placed to face capital losses from the effects of the ongoing house price falls, as many will have paid
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