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UK Interest Rates Latest Update
Interest Rate Update 8/9/2010
Current UK Interest Rate: 0.5%
UK Interest Rates Forecast: No change this month
Bank Set To Leave Rate Unchanged
The Bank of England is likely to leave the base rate unchanged at 0.5% for a further month. That's the view of most economists, who think that MPC member Andrew Sentance will remain the sole voice on the committee calling for an increase in rates.
A poll of 60 economists by Reuters on 1st September found that none expected the Bank of England to increase rates before the end of 2010 – something that was considered a foregone conclusion a year ago. The poll also found that the most widely-expected outcome was that the first increase to the base rate would take place in the second quarter of 2011, when the base rate would rise to 0.75%.
Mortgage Rates Continue To Fall
Meanwhile in the mortgage markets, the news is more of the same. Lenders continue to trim their mortgage rates in a bid to attract new customers. Borrowers with good deposits can readily access tracker and variable rates as low as 2.5%, and there are deals with sub-3% interest rates available to people with deposits of just 20%.
Fixed or Tracker?
Opinions vary about whether now is a good time to move to a fixed-rate mortgage deal or whether homeowners should stay on a tracker or variable rate and benefit from current low rates – which could continue for some time.
However, anyone benefiting
from a low variable rate should consider what might happen if rates rose
– as they eventually will – as their mortgage payments could
rise significantly overnight.
PREVIOUS UK MORTGAGE INTEREST RATE FORECASTS
UK House Price Forecasts and Predictions Latest Updates
House Price Update 8/9/2010
Current UK House Prices Situation: Regional fluctuations but little real change
UK House Prices Forecast: Slight weakening likely as autumn progresses
Did Prices Rise or Fall in August?
The Nationwide and Halifax House Price Indices are two of the most respected and widely-used barometers of the state of the housing market. As the UK's two largest mortgage lenders, Nationwide and Halifax have a large sample size to draw on. They are also sufficiently timely to reflect what's actually happening currently, rather than what happened a couple of months ago (as with the Land Registry index) or what might happen in the future (as with parts of the RICS Housing Survey).
The problem is that the Halifax and Nationwide indices often disagree on whether prices have risen of fallen in a given month. In August, Halifax recorded a rise of 0.2% but Nationwide recorded a fall of 0.9%. In July, the situation was the same – Nationwide recorded a fall while Halifax recorded a rise.
When reading these reports, I think that the secret is not to place too much emphasis on short term changes; home ownership is a long-term game. It is also important to remember that the figures published in these house price indices are national averages. Changes in house prices happen on a regional, often very local basis. That means that the national average might be falling, but prices in your area may be rising – or vice versa.
Of far more importance to most
home owners is how easily they could get a new mortgage deal, should they
want to move house. Halifax's latest HPI report did contain some good
news on this front. Thanks to falling prices and low interest rates, the
average proportion of first-time buyers' income required for their mortgage
payments has dropped from a peak of 50% in mid-2007 to just 28% –
below the long-run average of 34%. This improvement in affordability is
very good news for first-time buyers looking for a mortgage deal, as it
means their income will stretch further than it would have done a couple
of years ago.
PREVIOUS UK HOUSE PRICE FORECASTS
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