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Latest UK Interest Rates Forecasts and Predictions for Home and Property in the UK at 21 Mar 2008

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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Please note, this information is NOT necessarily RELEVANT in Scotland


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