13 Jan

Homebuyers could take out tracker loans as base rate remains low

Homebuyers could take out tracker loans as base rate remains low

People securing their finance to buy for houses for sale in the UK could be inclined to take out a tracker mortgage after the Bank of England voted to keep the base rate low.

Earlier today (January 13th 2011), the Monetary Policy Committee voted to keep the rate paid on commercial bank reserves at 0.5 per cent for the 22nd consecutive month, after it was reduced to the current level in March 2009.

This decision could encourage homebuyers to take out tracker mortgages that are calculated around the base rate as this will keep their monthly repayments low, so long as it remains at 0.5 per cent.

However, moneysupermarket.com has advised borrowers to prepare for when the base rate rises again and suggested taking out a fixed-rate mortgage so they do not incur high payback fees.

Clare Francis, website editor for the price comparison website, said: "With inflation remaining stubbornly above the government's two per cent target, pressure is mounting on the Bank of England to start increasing interest rates and a growing number of economists think base rate will go up in the first half of the year."ADNFCR-1222-ID-800341106-ADNFCR

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