Good news for homeowners as The Bank of England keeps UK interest rates at the record low of 0.5%.
Worries about rising house prices in parts of the UK had intensified the debate over when rates might increase, but despite recent evidence that the economy is strengthening, The Bank’s Monetary Policy Committee decided to maintain UK interest rates for yet another month, as many analysts expected. The reason for this, coming from concern that the finances of many individuals remain too weak to withstand a rise.
Whilst this is good news for those on a tracker or variable rate mortgage, and could be well received by anyone who is thinking about buying at the moment, it still leaves the question of, when will they rise?
Alan Clarke, economist of Scotiabank, believes that if wages continue to pick up, then a rise could come before Christmas. However most economists feel next year is more likely with The Bank themselves hinting in February that the second quarter of next year was a possible timeframe.
The good news is “The Bank is likely to use some of it’s other tools, before deploying the blunt instrument of an interest rate rise”, according to Martin Beck, senior economic adviser to the Ernst & Young ITEM Club.
This however is not necessarily good news for first-time buyers.
Low interest rates should be a positive for anyone looking to buy a property with a mortgage, but the combination of historically low interest rates and the government Help to Buy scheme could be causing the housing market to overheat, according to The OECD, who suggested that the government should consider restricting access to the Help to Buy scheme.