10 Sep

Bank of England decision to affect mortgages

Bank of England decision to affect mortgages

The Bank of England's decision to keep the base rate at 0.5 per cent is likely to affect which mortgage product homebuyers looking to purchase a house for sale in the UK will choose.

Yesterday (September 9th 2010), the Monetary Policy Committee decided to keep the base rate unchanged for the 18th consecutive month, leaving homeowners unsure of whether to take out a fixed-rate loan or a tracker mortgage.

Ray Boulger, spokesman for mortgage adviser John Charcol, suggested that while there has been an increase in the number of fixed-rate loans taken out over the last few months, mortgage providers have put introduced rates for a two-year period.

He recognised there "has been relatively little action in the five-year market", as people do not know how long the Bank of England base rate will remain at this level.

Although people might be tempted to take out a tracker loan if the base rate continues to stay low, Riach Independent Financial Advisers' Rob Riach suggested that interest repayments could increase dramatically "within a year or two".

He said that while they remain reduced at the moment, they "will not stay this way".  ADNFCR-1222-ID-800060957-ADNFCR

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