Mortgage costs set to fall further

Written on 16 February 2015 by Alistair Boscawen in Property News

Click here to find out how the Bank of England could help cut the cost of home loans.

interest rate slashBank of England governor Mark Carney has said its base rate could be reduced again from its all-time low of 0.5%, prompting speculation that mortgage costs could fall further.  

The speculation started after the BoE warned inflation is likely to fall below 0%. The Bank's latest inflation report reveals that falling energy and food costs will drive down the Consumer Price Index to below 0% in the spring. The most recent CPI measure was 0.5%.

Because the rate of inflation has fallen outside the target range of 1% to 3%, Carney has been forced to write a letter of explanation to Chancellor George Osborne. The BoE Governor says two-thirds of the discrepancy between the CPI rate of 0.5% and goal of 2% was down to one-off commodity price falls, particularly in energy and food costs.

While this could be good news for variable rate mortgage holders and household incomes generally, Carney has played down overall deflationary fears in the UK.

This is why now could be a great time to purchase a property. The combination of low mortgage rates and political uncertainty caused by the General Election in May mean many potential buyers are holding back from making a purchase decision.

This gives buyers in a position to make a move before voters go to the polls in May will have greater room for negotiation and less competition, particularly in areas of prime central London, where a large number of properties could fall under the mansion tax proposed by the Labour Party.

For more information click on the link below:

City AM

Alistair Boscawen

Alistair has 32 years’ experience as an estate agent, starting in the country house department of one of London’s main international agencies before moving to the Knightsbridge house department of the same agency and learning the difference in values between freehold, long lease and short lease houses in Knightsbridge, Belgravia, Chelsea and Mayfair.

All articles by Alistair Boscawen


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