Mortgages -
Base Rate unlikely to fall - 16/05/2008
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With the inflation rate rising to 3 per cent - 1 per cent above the Government’s target - the likeliness of a decrease in the Base Rate for mortgage interest rates seems to be very low according to Broker, John Charcol.
Katie Tucker, technical manager at John Charcol, said: "The Bank of England is now in a Catch 22 situation, if the Base Rate is left where it is and the mortgage lenders; who are sorely needed to keep the property market healthy, are unable to source cheap enough funds to lend at affordable rates; cut the Base Rate, and inflation rockets.”
She continued: "If the ongoing program of Base Rate, cuts is slow, so will be the recovery, however, if slower cuts results in more cuts being needed, homeowners on longer term trackers could potentially be the winners and see their payments steadily reduce by a percent and a half by the end of 2009."
Tucker also commented on the news that the Government-led incentive, HomeBuy scheme, which formerly allowed key worker, first-time buyers to part buy and part rent a property; has been expanded to allow all first-time buyers with an annual income of £60,000 or less, to apply for the scheme.
She said: “Although the expansion of the scheme will allow many first-time buyers to buy a share of a property without a deposit, the HomeBuy scheme’s administration has not been well known for its speedy service in the past.”
Furthermore, Tucker warned that paying a mortgage as well as rent each month, can often be more expensive than renting or buying elsewhere.
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