John French, sales director from Mortgage Advice Bureau at Farrell Heyworth Estate Agents, comments on the Bank of England’s Monetary Policy Committee’s decision to retain the base rate of interest at 0.5 per cent for the 50th month.
“Last month we were awaiting the first quarter Gross Domestic Product (GDP) results for the UK economy and the outcome was positive with, as expected, the UK posting a 0.3 per cent rise in GDP following the fourth quarter 2012 decline.
“This meant the UK had officially avoided the much-publicised potential ‘triple dip recession’.
“Following the publication of the positive GDP data, we are not surprised that at this month’s meeting of the Bank of England’s Monetary Policy Committee (MPC), the vote was once again to refrain from further monetary stimulus keeping it unchanged at £375bn.
“It also decided to maintain the base rate of interest at 0.5 per cent this month and this marks the 50th month that the Bank Rate has remained at this all-time low level.
“The Bank of England recently announced the appointment of a new Bank Governor, Mark Carney, former governor of the Bank of Canada, an economy that fared far better than many other Western economies following the financial meltdown.
“He is said to favour other forms of central bank intervention.
“So it will certainly be interesting to see if Quantitative Easing, the current governor’s preferred method of direct intervention, will stay.
“Following the recent budget announcements in relation to the Government’s Funding for Lending scheme (FLS), it has now been confirmed the scheme will be extended at least until 2015.
“One of the objectives of this policy was to reduce the cost of borrowing for banks and building societies, and, thereby offer mortgage borrowers and small and medium-sized enterprises access to cheaper mortgages and loans for businesses.
“And the policy does appear to be having the desired effect.
“At the beginning of May 2013, average two, three and five-year fixed rates had once again all fallen further to 3.82 per cent, 4.13 per cent and 3.96 per cent respectively.
“Not surprisingly with rates at these historic low levels, borrowers continue to be firmly committed to fixed rate mortgage products with nine in every 10 transactions during April being conducted on a fixed rate basis.
“In addition to reducing the cost of mortgage products, lenders have continued to steadily increase overall product numbers, with the number of mortgage products typically available rising once again in April to 6,742, a further increase of one per cent over March.”
n For further information on how this affects you, call into your local Farrell Heyworth office, freephone 0800 389 1666 or visit www.mortgageadvicebureau.com/farrellheyworth.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There is a fee for mortgage advice, and this is dependent on your circumstances.
The fee is up to 1.5 per cent but typically is 0.3 per cent of amount borrowed.