It’s been 5 months since Mark Carney warned that a base rate rise was ‘likely by the end of this year or early 2016.’
Well, the end of the year is almost upon us and there’s still no sign of a rise. Only last week the Monetary Policy Committee (MPC) voted by 8-1 to keep the Bank Rate at an all-time low of 0.5%.
Fears of a global economic slowdown, particularly in China, coupled with a less optimistic forecast for domestic growth, have made economists less bullish in their predictions.
And now there are even murmurings about interest rate hikes being pushed out to the second half of next year:
‘With inflation expected to remain below the Bank of England’s central target of 2% until 2017, we think the Bank Rate will remain on hold until the middle of next year. A rate rise in May or August seems most likely, to coincide with the Inflation Reports released in these months’
Scott Corfe, Head of Macroeconomics at Cebr
So if the experts can’t even agree, how are borrowers supposed to react?
Our advice remains the same: you need to be checking your options now.
While there may be a little more time to act than Mr Carney initially led us to believe, it’s unlikely that the current crop of low mortgage offers will be around when the interest rates do rise. We’ve seen a lot of lenders slash their margins over the summer in the wake of major competition for business and they won’t be able to sustain this for too much longer.
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