The debate taking place in recent weeks had been around not would the Monetary Policy Committee raise or reduce interest rates this month, but whether they would vote to re-introduce their programme of monetary stimulus known as Quantitative Easing (QE)
The Bank base rate has remained unchanged but the decision has been made that a further £75bn of new money will be injected into the economy through the purchase of assets including government bonds.
With the UK’s underwhelming second quarter gross domestic product figures actually being revised downwards to only 0.1% from a previously reported 0.2% it would appear that the MPC has recognised that the economy is in need of further medicine to attempt to keep us from falling back into recession.
This combined with the continuing crisis in the Eurozone is having a further negative effect on already weak consumer confidence. Activity in the mortgage arena has been fairly steady throughout the summer period and we have witnessed a small upward bounce in activity during September, which from a seasonal historic perspective is fairly normal, albeit at lower overall volume levels than in the boom years.
In spite of the turmoil in world stock markets and the Eurozone debt crisis, the UK mortgage market has continued to be reasonably robust. Mortgage product pricing remains at low levels with Moneyfacts reporting that borrowers requiring 90% LTV, traditionally first time buyers and those movers with low levels of equity, can now access 2 year fixed rates at an average of 5.39%.
The average 2 year fixed rate is now 4.22%, marginally up on September, but 5 year fixed rates have fallen further and the average is now 4.73%. These rates have stimulated increased activity amongst purchase and remortgage borrowers during September as people capitalise on these unprecedented rates. Overall mortgage product numbers declined a little in September but have rebounded in the first week of October, returning to levels similar to August. Intermediaries currently have access to around 7,300 deals, almost 50% more than the same period last year.
If you are looking to take advantage of these new rates, Hunters Estate Agentshave thousands of properties and homes for sale all over the UK.
Craig Elliott is from Mortgage Advice Bureau. For further information on how the latest base rate decision affects you, please 01904 621026 or 07921150637.
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