Northamptonshire’s property hunters have a closing window of opportunity to take advantage of historically low interest rates
Mortgage rates, the rate of interest charged on money loaned to buyers, are roughly based on the Bank of England’s (BoE) base rate, and now many economists are arguing that they should go up.
If the base rate, the amount the BoE charges banks for lending money, rises, then mortgage rates inevitably increase, too.
Since August 4, 2016, the BoE base rate has been at an historic low of 0.25 per cent. It was cut to that level following the UK’s Brexit vote to leave the European Union.
More than that, since December 6, 2007, the base rate has been no higher than 5.5%. The Bank of England’s all-powerful Monetary Policy Committee slashed the rate as a response to the credit crunch which threatened to bring the banks crashing down earlier in that unsettling year.
Policy makers were desperately trying to save the UK from not only a recession but an economic depression of a depth not seen since the 1920s. Thankfully, the economy has recovered somewhat since those dark days but interest rates have remained at these very low levels for a decade.
But now the economic argument is swinging, slowly but surely, the other way.
Economist Michael Saunders, who is one member of the rate setting Monetary Policy Committee, has a record of voting for an interest rate rise at its monthly meetings.
His view, expressed in media interviews, is that a small increase is necessary to make sure that inflation is kept under control.
His argument isn’t yet widely accepted by the majority of decision makers but commentators reckon rates will rise, sooner rather than later.
It is a question of when, rather than if, with some saying a rise could happen in 2018. Others believe 2019 is a more likely date.
Northamptonshire mortgage market watcher Edward Cookman, of Barfield Financial Advisors, based in Billing Road, Northampton, believes that the era of historically low interest rates is coming to an end but there is still time for property buyers to act.
Mr Cookman said: “Interest rates are one of the few weapons that economists have to get money into the economy during times of recession. They used up all their ammunition dealing with the credit crunch in 2007, so it is inevitable that at some stage, to reload the bolt they shot, that interest rates will have to go up.
“Fortunately for those people looking to buy property in Northamptonshire for the first time, for those looking to move and others wanting to borrow money to invest in their properties, there is still a window of opportunity.
“For first time buyers, this is something of a golden age for mortgage rates and a massive opportunity to secure the property of their dreams.”
He added that people looking to re-mortgage, to either move home or invest in their current property, could also find some amazingly low fixed rate deals in the current market.
Mr Cookman added: “I would urge people who have a property dream not to delay taking action. People who want to find out more can do so on the Barfield website."
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