AN END to the current cycle of interest and mortgage rate rises could be in sight. Skipton Guernsey Ltd believe the Bank of England’s Monetary Policy Committee’s decision to leave the UK’s base rate on hold again in October is a good sign.
It thinks it could bring relief to home owners who have seen borrowing costs rise to their highest level in six years.
Short-term data is now pointing to a noticeable easing of house price inflation in the UK and further falls are expected in the important consumer price index when the data is released later this month.
The CPI dropped to 1.8% from 1.9% in August, although the broader retail price index is still running at 4.1%, up from 3.8% in August.
With such mixed signs still clouding the market, it might be too soon to start talk of an interest rate cut, but many commentators are hoping that at least there will not be further rises in the short term, unless an unexpected shock rekindles upward pressure on inflation.
‘Steeply rising inflation is the enemy of all homeowners as it virtually guarantees the Bank of England will have to act and raise the cost of borrowing,’ said Skipton’s director of lending Nigel Pascoe.
‘We now think we are in a ﾓwait and seeﾔ period. The data that emerges over the next few weeks will have a significant impact on future interest rate pressures.’
Mr Pascoe said that while any cut in interest rates might still be some time off, when one does happen, many people will want to see reductions in their monthly payment.
For some, though, budgeting certainty and fixed rates might suit their lifestyle better.
‘We believe it is important to fully understand a customer’s attitude to mortgage rate risk and that this is one decision that cannot and should not be rushed.’
‘The message from Skipton Guernsey is clear - take the time and make sure you do your homework so you choose the correct type of mortgage. This will pay off in the longer term.’
Article posted on 16th October, 2007 - 12.00am
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