Bank Interest Rate May Remain Unchanged for Longer than Expected
In the midst of warnings concerning higher interest rates, comes some good news for homeowners that have yet to remortgage. The chief economist at the Bank of England, Andrew Haldane, has stated in a recent speech to business leaders in Kenilworth, that the UK economy will not require higher interest rates due to weak global economic growth. There are also financial and political risks in play that will make the Bank more cautious in changing the current standard base interest rate.
The rate has remained unchanged since March 2009 and resides at a historical low of 0.5%.
Mr. Haldane said in an interview with the BBC that he expects interest rates would remain lower for much longer than he had expected only months prior. This could mean that the interest rate will not be increased as expected in early 2015 but later.
The UK economy is expected to stay on path of steady growth and recovery but other countries have not fared so well. Some are facing recessions in the coming months according to some experts. However, the UK economy is set to continue on a steady growth pattern and there are fewer concerns than in other places outside of the UK.
This news could have an impact on the behaviour of lenders. Recently, lenders have been lowering their interest rates on mortgage and remortgage deals to attract borrowers before expected tightening of lending and higher interest rates. However, now that there is a possibility that the interest rate by the Bank will stay unchanged for longer, the cheaper interest rate deals may soon disappear and be replaced with more moderate deals.
Homeowners are encouraged by experts to look closely at the current remortgage deals available and take into consideration the longer processing times to complete a deal due to the new Mortgage Market Review guidelines. By choosing the right time and the right deal, a homeowner or home buyer could grab a cheap loan while also locking in a low rate before interest rates increase.