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UK Interest Rates Forecasts and Predictions for Home and Property in the UK

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Interest Rate Update 23 January 2012

UK Interest Rate: 0.5%

UK Interest Rates Forecast: No rate rise on the horizon

Mortgage Lending Up For Last Five Months

Mortgage lending has risen year-on-year for the last five months, according to the latest figures from the Council for Mortgage Lenders.

Total lending in December 2011 was £11.7bn; 12% higher than in December 2010, making five consecutive months of higher year-on-year lending. Mortgage lending was up 3% from 2010 over the whole of 2011, with £140bn in new mortgage lending advanced over the year.

Commenting on the figures, Bob Pannell, CML Chief Economist said: "The closing months of 2011 saw stronger mortgage lending activity and housing transactions, despite the fact that short term economic prospects are challenging."

Pannell also commented that: "continuing Eurozone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call."

Rate Competition Strong As Buyers Choose To Fix

Competition between mortgage lenders continues to be strong as an increasing number of borrowers choose fixed rate deals. Almost two-thirds of mortgage deals taken out in November were fixed rate, according to one trade organisation – up from 62% in October.

A number of mortgage lenders have trimmed their fixed rates over the last month, including some of the biggest names on the high street.

Mortgage lenders may also experience a surge in demand from first-time buyers who are seeking to complete on house purchases before the stamp duty holiday ends in March.

First-time buyers are currently exempt from the 1% stamp duty which would normally apply to properties costing up to £250,000.

Background to this report

It can be difficult to accurately forecast the movements of the UK property market and to predict forthcoming changes to interest rates – that is why each week we analyze all the latest expert opinion on the state of the UK property market and condense it into a short, easy-to-read UK Property Market Forecast. We also do the same for UK interest rates, and each week produce an Interest Rate Forecast which provides the latest interest rate forecasts and predictions for the UK.

Understanding the factors that are influencing interest rate and property market forecasts can give you an advantage when considering a property purchase. The UK property market is affected by a number of different factors, which combine in sometimes surprising and quite localised ways. Our weekly UK Property Market Forecast takes all of these into consideration and provides a mixture of national and local property market forecasts.

In much the same way, movements to UK interest rates can sometimes be forecast. We provide the latest interest rate forecasts and predictions from leading UK experts, together with comment on what it all means and how factors like inflation and energy prices are influencing interest rate forecasts.