Today the Monetary Policy Committee (MPC) announced its latest decision on interest rates.
The Bank of England’s base rate will stay at 0.25 per cent, but the outlook for the near future is very different.
In September, the Bank of England's MPC cautioned of the possibility another cut closer to zero from the current 0.25 per cent could follow this month.
However, that was before a host of economic data revealed an unexpected 0.5 per cent growth in GDP in the third quarter and an expected return to manufacturing sector expansion in the fourth quarter.*
Despite the growth, October brought the pound to an definitive low, becoming the world's worst performing currency of the month trailing behind over 150 other currencies**.
Andrew Sentance, senior economic adviser to PwC, and Sir Steve Robson, a former senior official at the Treasury, have called the Bank of England’s rate setters to push interest rates back up to 0.5 per cent to help to curb the risks of inflation rising harshly following the drop in the pound.
They argue that the 5 per cent decline in sterling since the Bank cut its base rate in August should persuade the Bank’s MPC to raise its main rate from the historic low of 0.25 per cent.***
On a positive note, Mark Carney announced that he would be staying on as the Governor of the Bank of England for another year until June 2019, 6 years in total in the position. This means he will be in the role 3 months after the UK is expected to have left the EU in March 2019.
Mark Carney wrote; "By taking my term in office beyond the expected period of the Article 50 process, this should help contribute to securing an orderly transition to the UK's new relationship with Europe."
In the mortgage world, however the cuts haven’t been all good news, with a quarter of lenders still failing to pass on the cut to their customers meaning borrowers sitting on their lender’s Standard Variable Rate may be losing out.****.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, commented; "Many borrowers on their standard variable rate (SVR) hoping to benefit from the Bank of England reduction could be sorely disappointed as two months on, a quarter of lenders have still yet to cut their rates to reflect the new circumstances".
In a report from the finance website they revealed that the average SVR has only fallen by 0.17 per cent from August to mid-October, despite the base rate being cut by 0.25 per cent. Where customers were hoping to see a significant reduction in payments, they have been left waiting.
However, those looking to remortgage or buy a property are still able to get access to some extremely competitive deals on the market, with record low rates, and contractors are no exception to these offerings.
Simon Butler, Associate Director, at Contractor Mortgages Made Easy commented; “The decision to keep the base rate at 0.25 per cent may come as a surprise to some. The positive news of the unexpected growth in the economy have crushed the chances of another cut this month. The bank will likely sound much more upbeat and increase its forecasts for GDP and inflation.”
He added; “Now many are eyeing the Chancellors Autumn statement later this month for more insight into the direction that the newly appointed Conservative party will be taking with the UK economy.
“Many believe that the Chancellor will take a ‘soft’ approach to handling the EU reforms for the upcoming year, and that this could lead to a further rate cut before the end of the year.”
“For clients looking to remortgage or obtain their first home, now may be an especially good time to consider the competitive deals on offer where monthly savings may prove considerable. For those with substantial savings which are earning low interest rates, it may be an opportune moment to consider whether an Offset mortgage may be suitable to your circumstances.”
If you are looking to secure the best rate or want to save money by moving away from your current lenders SVR, Contractor Mortgages Made Easy have access to over 2,245 rates, with 42per cent of those exclusive to us. Whether you want to fix for 2 years or offset your existing savings against your mortgage, our Senior Mortgage Consultants have the expert knowledge to deal with your situation as a contractor whilst ensuring you get the best deal from the whole of the current market.
With Contractor Mortgages Made Easy, you’ll be able to borrow up to 5.49 times your annualised contract rate, with no company accounts needed.
For more information, get in touch on 01489 555080 or email firstname.lastname@example.org
Article by: Bradley George, Senior Protection Consultant at Contractor Mortgages Made Easy
Media Contact: Sarah Middleton, Public Relations Manager
Tel: 01489 555 080