CHEAPER BORROWING SET TO CONTINUE?

Nigel Bull, one of a team of Mortgage Advice Bureau (MAB) financial advisers serving Besley Hill Estate Agents offices throughout Bristol and Gloucestershire, comments on the Bank of England’s Monetary Policy Committee’s decision to retain the base rate of interest at 0.5% for the 50th month. “Last month we were waiting 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% rise in GDP following the fourth quarter 2012 decline. This meant that the UK had officially avoided what was potentially a “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% this month and this marks the 50th month that the Bank Rate has remained at this all time low level. The Bank of England has 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 global financial meltdown. Mr Carney is said to favour other forms of central bank intervention, so it will be interesting to see if Quantitative Easing (QE), the current Governor’s preferred method of direct intervention, will stay, or if we will see a new policy direction. Following the recent budget announcements in relation to the Government’s Funding for Lending scheme (FLS), it has now been confirmed that 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. The policy appears to be having the desired effect as at the beginning of May 2013, average 2, 3 and 5 year fixed rates had once again all fallen further to 3.82%, 4.13% and 3.96% respectively. Not surprisingly with rates at these historic low levels, borrowers continue to be firmly committed to fixed rate mortgage products with 9 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 to intermediaries rising once again in April to 6,742, a further increase of 1% over March.” To see if you could take advantage of these low rates whether you are remortgaging or buying for the first time, or to discuss your circumstances in more detail, call Nigel Bull on 0117 9325686, email him at nigelb@mab.org.uk or contact the MAB local mortgage specialist at your nearest Besley Hill office. Note: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.