Posts Tagged ‘best rates for first time buyers’As expected Bank Base Rate stays at 0.5%Thursday, June 10th, 2010The Bank Of England has decided to keep the interest rate at 0.5% for the fifteenth month in a row. The 200 billion pounds of quantitative easing scheme remains unchanged as analysts predicted. The freeze was expected to remain until the extent and scale of the government’s spending cuts programme is announced in the June 22 budget. Average house prices still on the increaseThursday, June 3rd, 2010According to Nationwide, average house prices have increased in May by 0.5% (month on month). With the annual rate of house price inflation now 9.8%, compared to May 2009. Martin Gahbauer, Nationwide’s Chief Economist said: The price of a typical UK property rose by a seasonally adjusted 0.5% month-on-month (m/m) in May, following a 1.1% increase in April. The smoother 3 month on 3 month rate of increase rose from 1.1% in April to 1.7%, as February’s fall in house prices dropped out of the most recent three month average. The annual rate of house price inflation dropped from 10.5% to 9.8%, which reflects the weaker pace of increase in May 2010 relative to May 2009. Since reaching a trough in February 2009 – following a drop of 19.3% from their October 2007 peak – house prices have risen by 12.2% and are now just 9.5% below the October 2007 peak. “Housing market conditions remain characterised by thin transaction volumes and a relative scarcity of properties for sale, despite a slow return of more sellers in recent months. The current supply-demand balance on the market is still consistent with relatively stable to modestly upward trending prices.” Bank Base Rate remains at 0.5%Thursday, April 8th, 2010The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion. The base rate has not changed for over 12 months with the last change on 5 March 2009 with a reduction of 0.5 percentage points from 1.0% to 0.5%. A programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009. The most recent change in the size of that programme was an increase of £25 billion to a total of £200 billion on 5 November 2009. With the timing of the General Election the next Monetary Policy Committee meeting will conclude on the morning of Monday 10 May, with the decision announced at 12 noon. The Inflation Report will be published as originally scheduled on Wednesday 12 May. Information on the Asset Purchase Facility can be found on the Bank of England website at http://www.bankofengland.co.uk/monetarypolicy/assetpurchases.htm. The Bank will continue to purchase high-quality private sector assets on behalf of the Treasury and financed by the issue of Treasury bills, in line with the arrangements announced on 29 January 2009. Low Interest Rates may stay for longer than expectedThursday, January 7th, 2010Today’s decision by the Bank of England (BoE) heralds a period of low interest rates stretching into the medium to long-term, say experts.
Most analysts were unsurprised by the MPC’s vote to keep interest rates at 0.5% and continue its programme of quantative easing (QE), which is on target to end in February. The Bank has now held rates for 11 consecutive months.
Azad Zangana, European economist at Schroders, says: “The MPC remains frozen in wait-and-see mode by voting to hold interest rates today at 0.5%. “Inflation is expected to rise sharply over the coming months as energy price base effects from last year unwind and the impact of VAT reinstated at 17.5% feeds through. Bank of England’s view short-term inflationary pressures are temporary and we expect inflation to fall back towards the end of the year. “With the UK’s tendency to experience ‘double-dip’ recessions, the MPC is unlikely to raise interest rates until a sustained recovery is certain – possibly not until the fourth quarter of 2010.” Analysts at Legal & General (L&G) also expect the Bank to remain cautious well into 2010. Ben Thompson, director of mortgages at L&G, echoes a general level of uncertainty within the industry: “We have never seen financial intervention and stimulus on this scale before and we don’t know for sure how it will pan out for borrowers. The normal rules don’t necessarily apply.” However, February, when the Bank’s QE programme is due to come to an end, is being seen as a possible turning point. William Dinning, head of strategy at Aegon Asset Management, says: “We do not expect the Bank to do anything new until February when it has digested its latest inflation report and can then make a decision on whether to renew its QE gilt-buying programme that expires at the end of this month.’ Edward Menashy, chief economist at Charles Stanley, agrees: “The current QE programme of £200bn is expected to be complete by February, so we can expect further information from the MPC when it announces in early February.” The Bank’s decision to hold rates is bad news for savers, though. Steve Folkard, head of pensions and savings policy, AXA, says: “Obviously the decision is not great for savers but any upwards move would only have been marginal, with minimal positive effect. The Bank is still very sensitive to the large numbers of people with debt, and they are higher on its agenda right now.” Bank Base Rate stay on holdThursday, December 10th, 2009The Bank of England’s Monetary Policy Committee (MPC) has announced that the base rate of interest has been frozen at a historic low of 0.5% for the ninth month in succession. The MPC also voted to continue with its programme of Quantitative Easing (QE) – which was extended by an additional £25 billion last month to £200 billion – a move welcomed by businesses who believed that the economy would stall without it. Fewer mortgage options for first-time buyersTuesday, September 22nd, 2009There are fewer mortgage options for first-time buyers, with lenders cherry-picking borrowers.According to Moneyfacts, borrowers with a 10% deposit have seen just a 0.12% drop in the average mortgage rate, despite the cost of funding to lenders falling 4.35%.
By comparison, those with a 40% deposit have seen a 1.86% reduction in the average mortgage rate. Borrowers with a 10% deposit taking out a new two year deal on a £150,000 mortgage will only see their monthly repayment fall £11 from £988 to £977, while those with a 40% deposit see a reduction of £165 per month from £998 to £833. Michelle Slade, spokesperson at Moneyfacts.co.uk, commented: “A higher margin for risk is expected on a 90% LTV deal, but a 4.25% margin over the cost of funding seems excessive and difficult to justify. “Two years ago, rate-driven competition led to 90% LTV deals being some of the most attractive rates on the market. Today, a 25% deposit remains the level where most lenders are willing to do business. Anything smaller than this and borrowers will pay a hefty price.
“Sub-two percent rates are being advertised by lenders, but we have no way of knowing how many borrowers actually qualify for these deals. Having been tempted through the door, many are likely to be offered much higher rates. “First time buyers, once seemingly the lifeblood of the property market are now apparently being ignored as lenders continue to cherry pick lower risk borrowers. “It appears borrowers searching out a new deal are paying a higher price to subsidise existing customers, many of which are paying record low rates.” Contact 1 Stop Financial Services were one of our advisers can discuss your options and guide you in the right direction. |
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