Concerns that interest rate rises were imminent have been quashed as economic influences do not put pressure on the Bank of England (BoE) to raise rates.
The Office for National Statistics reported that Consumer Price Index inflation fell to 1.6, 0.3% lower than the previous month, remaining below the Bank of England’s target rate of 2% meaning measures were not needed to curb inflation.
BoE Policy maker Professor Miles suggested inflation is likely to remain below the target for some time to come when speaking to the BBC, and that this was good news as sharp or immediate changes to interest rates would not be needed.
“There has been a growing feeling amongst my customers that interest rates will rise within the next 12 months. This news does not make a rise certain. In addition mortgage interest rates remain competitive largely unaltered. I’ve received updates from 2 major lenders confirming slightly reduced fixed rates.” Commented Andrew Fagg of Davenport Financial Management.
When the Monetarily Policy Committee (MPC) voted on interest rises this month two of the 9 members voted for a 0.25% increase to 0.75% from this historic low rate of 0.5% which has stood for more than 5 years.
The two members cited falling unemployment and optimism on wage growth as the reason for their vote, an early interest rate rise in anticipation of inflationary pressures from wage growth. They argue that recent growth has been more robust, underpinned by stimulation, and that the rise would mean monetary policy continued to be supportive, especially considering the normal rate pre 2008 was around 5%.
This is the first time the vote has been split since 2011 which indicates the economy has moved on substantially from the panic of 2009, things are stabilising and the BoE will only make measured adjustments when they are needed to try and keep the economy steady and need to nurture and protect economic stability before growth.
All in all consumer confidence is good, the outlook for rates is that incremental changes will be made but these are not anticipated until 2015 so now is a good time to look into the mortgage products on offer and if you are buying, consider all the options including longer term fixed rates.
To arrange a full free mortgage consultation with Andy Fagg of Davenport Financial Management please click here, call 07720 353866 or visit our Mortgages page for further information and latest rates.
Davenport Financial Management Limited is authorised and regulated by the Financial Conduct Authority. Davenport Financial Management Limited is registered in England No: 05608901. Registered office: Sherwood House, 41 Queens Road, Farnborough, GU14 6JP, Telephone 01483 427366. Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.