| Current
UK Interest Rate: 5.25%
UK
Interest Rates Forecast: Cut to 5% possible in May
Cost
of Borrowing Rises Despite BoE Rate Freeze
Despite
last wee
Secondly, and perhaps more significantly, mortgage lenders
are trying extremely hard to avoid risky loans and to
bump up their profit margins in preparation for tougher
times ahead.
Mortgage
lenders are demanding higher deposits for the best rates
and 100%+ loans are now a thing of the past. The reason
for this is that lenders don't want to be saddled with
borrowers who may have trouble keeping up with their payments
over the next few years. For borrowers, however, it's
bad news - rates aren't really falling and deposits are
rising - so even if you managed to get a good deal last
time round, you may not qualify for one the next time
you remortgage.
Will
Public Perceptions Lead BoE to Hold Rates?
The
Bank of England's latest household survey has found that
the public perception of inflation is currently 3.9%.
This is much higher than the official CPI figure of 2.2%
but is broadly in line with the RPI measure of inflation,
which includes mortgage interest.
It's
unsurprising that households feel inflation is high -
with energy, interest and food prices all having risen
steadily in recent months. However, the MPC are keen to
avoid expectations of high inflation leading to wage pressure
- and further inflation. For this reason, these public
perceptions might encourage the MPC to leave rates on
hold a little longer before cutting them again.
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