It has been almost seven years since the Bank of England
originally cut interest rates to a record low of just
0.5%. Originally announced back in 2009, it brought
interest rates to their lowest level in more than
300 years. With Northern Rock becoming nationalised
and many other banks forced to be bailed out by the
taxpayer, this was just one of a series of emergency
cuts designed to save the country falling further
into an economic meltdown.
Will This Finally be the Year?
Since then, many analysts have been predicting that
rates would soon be on the rise again. While the forecasts
have proven to be wrong every time, some independent
economists are now saying that 2016, finally, will
see the first increases. Many believe that the recent
decision by the US Federal Reserve to raise interest
rates for the first time since the summer of 2006
has opened the door for Bank of England to follow
suit. This is expected to come in two separate increments,
each by 0.25%.
Lenders Cut Rates to
Mortgage borrowers benefited from record
lows as price wars between the big lenders took off.
So far this year we seen a continuation of this trend,
with a flurry of rate cuts and extra incentives to
try and lure in first-time buyers and those remortgaging.
While it's good news for borrowers that the low pricing
has continued, it’s always important that you
look beyond headline rates and also consider all the
extra variables that can affect the overall cost of
a mortgage. Saffron
Building Society currently advertise no arrangement
fee and a cashback sum of £800, which could
prove a better than other deals.
How Will This Impact Mortgage Borrowers?
One thing that you will certainly have to account
for is the stamp
duty increase in England and Wales that is to
go into effect next April. Similar changes are also
expected north of the border in Scotland and this
will affect anyone buying a home that is not their
main residence. That will make things more expensive
for second-home buyers and buy-to-let landlords, and
may deter some potential buyers altogether. The Council
of Mortgage Lenders believes that the number of
new loans made to landlords will now fall sharply,
from 116,000 in 2015 to just 90,000 in 2017.
analysts are also predicting that this could cause
some buyers to rush through buy-to-let property purchases
before the higher stamp duty rates take effect on
March 31. For anyone who finds themselves in this
position, it’s important that they don’t
rush into risky buys that could cause them problems
further along the road.