Mortgage holders could benefit from long-term low rates. The nation’s mortgage borrowers stand to benefit from a continuation of the low interest rate environment, if a financial expert’s forecast proves correct.
According to an economist at the Centre for Economic and Business Research (CEBR), the Bank of England (BoE) will not raise its base rate until 2011 at the earliest.
BoE policymakers also announced today (October 8th) that they would maintain rates at 0.5%, an all-time low in the institution’s 300-year-plus history, until next month.
Keeping rates low helps to boost cashflow in the economy, potentially resulting in lower mortgage and loan APRs.
This is due to the fact that UK financial institutions borrow from the BoE at the base rate.
With many analysts suggesting that the economy has returned to growth following the recession, the BoE might be expected to raise rates over the months to come.
However, CEBR economist Benjamin Williamson pointed out that the UK’s recovery might prove fragile, lessening the likelihood of future increases.
“We don’t see base rates lifting from [0.5%] in 2010; partly to counteract the expected sharp fiscal contraction, but also because [if] the recovery does remain weak, [the BoE] have got to keep borrowing costs down,” he added.
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