October 16th, 2014
Fears of an increase in the Bank of England Base Rate are becoming more immediate, following figures released by the Office of National Statistics this week, showing unemployment at a 6-year low.
The figures, released by ONS this week, show unemployment claimants at 1.97m in August, over half a million lower than the same period last year, and its lowest level since the financial crisis of 2008.
“This is good news for the UK economy with a reduction in benefit claims due to unemployment” said Ben Leek, senior consultant at Contractor Mortgages Made Easy.
“It is in fact the biggest drop in figures since recording of annual changes in unemployment began in 1972. It’s not all good news however as wages are generally reducing in real terms, with the average wage growing 0.7% in the last twelve months, along with inflation plummeting to 1.2%.”
“The biggest fear for many borrowers however, particularly homeowners, is that a rise in Base Rate could be imminent.”
The Bank of England has repeatedly stated that an increase in Base Rate would only be considered when inflation is under 2%, and unemployment is under 2 million. With both of these short-term targets now being hit, it would seem that we could see a rise from 0.5% sooner rather than later.
“This is probably the question that we are asked most commonly by clients, “when will rates increase?”, and whilst it’s almost impossible to predict, we can be fairly certain that there will be an increase in the next 6-9 months, particularly taking into account next May’s General Election” added Leek.
“Thankfully, market leader Halifax have this week made it more affordable than ever before for First Time Buyer’s to get on the property ladder, with the introduction of exclusive sub-3% fixed rates with just a 10% deposit, available through selected brokers only.”
“A large part of this is due to the company coming towards the end of its business year, with lending targets to meet, however Halifax has consistently shown a commitment to what other lenders would traditionally deem ‘high risk’ lending” said Ben.
Make no mistake though; these rates will not be around forever. It’s likely that they could return to their ‘normal’ level of above 4% even by the end of the month, so if you want to take advantage of these deals, the time for action is now.
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080