There has been much speculation around the subject of interest rate rises for some time now. Thankfully, since the Chancellor, George Osborne, announced in his Mansion House speech, that the Bank of England will be given new powers to intervene in the mortgage market, we have a clearer view. Its not a matter of how high interest rates are set to rise, but in fact how quickly they are set to rise that is causing some concern.
With the debate surrounding the property market recovery and the potential for prices to soar out of control in certain parts of the country rumbling on, Bank of England Governor, Mark Carney has made a remarkable U-turn, and is now backing an interest rate rise.
During the last few months interest rates have looked increasingly likely to rise with most market speculators expecting this rise to come in the second half of 2015, after the general election. However, it now looks like it will happen before then, as the rising concerns about the housing market in London continue to capture the media’s attention.
Experts have pointed to the fact that a majority of the house price growth has been in London, due to overseas buyers purchasing properties and fuelling the market. However latest industry reports have identified that this is now slowing, with predictions of a 0% growth in the next term.
Some industry representatives believe that the new MMR rules that were introduced in April this year are having an impact on the mortgage market, figures show that lending to first time buyers increased by only 1% in April. This could be evidence of a mismatch in housing and mortgage market activity and many experts believe that caution should be taken with regards to any rushed interest rate rises.
News on the grapevine is that economists are considering a small rise in the interim, around 0.25%, then another small rise next year. So if you are looking for a mortgage, lock into a lower rate now!
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