Buy-to-let
The Bank’s Monetary Policy Committee (MPC) had been widely expected to freeze rates.
The decision follows signs that the UK economy continues to show resilience in the face of turbulent global equity markets and depressed sentiment, comments Errol Francis, UK Equities portfolio manager Credit Suisse.
“The signs in the economy over the past few months suggest the Bank of England could raise interest rates by at least a quarter of a percentage point before the end of the year, with inflation remaining a risk because of high energy prices.”
What should borrowers do now?
Ray Boulger of mortage broker Charcol considers what mortgage borrowers should do now. Fixed rate mortgages now look expensive unless base rate rises above 5 per cent. However, there will always be a large market for fixes due to many people wanting the security of knowing exactly what they are paying out each month.
“Trackers and discounts are a better option for those wanting the cheapest deal, but able to withstand an increase in payments should interest rates rise by 1 per cent or so. An ideal combination is a tracker or discount with a droplock facility, allowing the borrower to switch to any of their lenders fixes at any time if and when they consider the fix offers better value.”
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