February 13th, 2014
The good news for contractors looking for a mortgage loan is that the Bank of England have confirmed that increases to the base rate will not be imminent, amid speculation that the sharp decrease in unemployment figures would force a rise for interest rates. Back in August 2013, Mark Carney, the Bank of England governor, set out his forward guidance plans for the economy, in which he stated that if unemployment figures in the UK met a target of 7% or under, he would consider increasing the bank base rate. Since that target has now been met ahead of the time-scales Carney had projected, the BOE have taken the decision to re-evaluate the benchmarks for increasing interest rates.
During a press conference yesterday, Carney confirmed that he felt the central bank’s forward guidance policy was working for the good, but he was quick to acknowledge that the recovery was steady, and that rates would only rise gradually so that the market would not be destabilised.
Carney said: "Forward guidance is working – expected interest rates have remained low even as the economy has recovered strongly, uncertainty about interest rates has fallen, and most importantly, UK businesses have understood the message," On a more cautious note, he added that, "Households are saving less and spending more and business investment is likely to gather pace this year…A few quarters of above trend growth driven by household spending are a good start but they aren't sufficient for sustained momentum.”
In accordance with the latest update from the BOE, figure were released yesterday by the Council of Mortgage Lenders, that confirm approvals for first time buyer mortgages during 2013 increased by 37 per cent on the previous year. The figures show that in 2012, a total of 19,000 mortgages were approved, compared to 26,700 during the following year. As a month by month comparison, the overall level of first-time buyer approved loans rose by 1.1 per cent.
The good news for contractors looking to remortgage is that the level of approved mortgages in this area continued to rise, and in December of 2013 there was a total of 25,300 mortgages signed off by lenders. This presents an increase of 16 per cent on the figures recorded from December 2012, and confirms that the Funding for Lending scheme helped the banks to continue lending affordable options over the year.
Simon Butler, of Contractor Mortgages Made Easy, said: “It appears that the assistance provided to the first time buyer market by the Government, coupled with the increase in confidence this engendered, has pushed the mortgage sector forward in leaps and bounds from where it stood 12 months ago. If interest rates continue to remain low for a further 12 months, it would not be surprising to see further improvements by the end of the 4th quarter of 2014.”
Article By: Jon Shields, Media Executive at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080