Interest Rate Update 21/9/11

UK Interest Rate: 0.5%

UK Interest Rates Forecast: Low mortgage rates for the foreseeable future

Lender Continue To Cut Mortgage Rates

This week saw more mortgage lenders cut interest rates, with improved deals available even for buyers with small deposits.

New deals announced this week include a five-year fix at 4.99% for buyers with a 10% deposit and a 4.19% five-year fix for borrowers with a 15% deposit.

In the popular two-year fixed-rate market, borrowers with a 10% deposit can expect to pay a fixed rate of at least 4.39%, while borrowers with a 30% deposit can fix for 2.69% at the time of writing.

These figures show that despite the improvements, mortgage lenders are still playing it very safe – only lenders with large deposits can access the very best rates.

Mortgage Lending Up 6% in August

Gross mortgage lending rose by 6% in August from July and was 10% higher than in August 2010, according to new figures from the Council of Mortgage Lenders (CML).

Bob Pannell, CML's Chief Economist, says that the figures show a broadly stable figure over the summer period:

"The August performance more or less offsets the weaker than expected July figure. Taking July and August together, lending has shown little change on the same months of 2009 and 2010."

MPC Unanimous On September Rate Hold

The minutes of the September meeting of the Bank of England Monetary Policy Committee show that the MPC voted unanimously to leave the Bank Rate unchanged at 0.5% in September.

The decision was widely expected and it would have been surprising if any member had voted against it, such is the level of anxiety about the UK, Eurozone and US economies at present.