Mortgages stable as interest rates fall

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Mortgages stable as interest rates fall

Unhappy homebuyers all over the country and families on tight budget now have a ray of sunshine since a forecast recently made public revealed that interest rates may possibly plummet to about an encouraging three percent within a year; the first Bank of England base rate cut is predicted to be as soon as next week.

A high ranking official from the financial forecaster giant Global Insight, Dr. Howard Archer, said that a 0.25 percent cut is very much credible at the Bank of England’s monthly meeting slotted for next Thursday. His recent prediction however lies on both sides of the divide since it is based on what can only be termed as an overcast point of view for the economy.

Dr. Archer frankly cautioned that since banks have cut down the lending in the last three months, mortgage rates were unlikely to depreciate in line with base rate fluctuations. As a matter of fact, the mounting cost of borrowing in the money markets is where many banks are laying the blame for their recently financial troubles.

In the same light, the Bank of England, through its Credit Conditions Survey has also warned, without doubt, that the economy’s situation will sadly worsen over the coming three of four months.

In addition, a confident Dr Archer supposed that the end of easy credit for many families and businesses will help propel the UK into a slump until this time next year.

As much as this factor will lead to a steady increase in the current unemployment figures, the good thing about it is that it will lead to a decrease in the inflation rates.

Dr Archer deduced that the inflation rate would go as low as the government’s set target of two percent by the end of next year, which is quite encouraging.

About the Bank of England

The Bank of England is the equivalent of the Central Bank of the United Kingdom. The Bank of England, founded in 1694, nationalised in 1946 and given independence in 1997 has responsibility for maintaining monetary and financial stability. In practical terms it has the responsibility for setting the interest rates which inturn help to keep inflation low. The Bank of England also has the responsibility for printing all bank notes and coins.

As one of the Bank of England’s marketing documents states: ‘Low inflation, trust in banknotes and a stable financial system are key ingredients for the economic well being of our country.’

About the Credit Conditions Survey

The Credit Conditions Survey is a report which is compiled by the Bank of England to help it assess the state of the economy and uphold its core objectives. As part of this report the Bank of England asks various mortgage lenders about the past quarter and the coming quarter. The survey encompasses various aspects of lending including; lending to non-financial corporations, and to non-bank financial firms as well as secured and unsecured lending to households and small businesses.

About Global Insight

Global Insight is a company which provides forecasting information. It provides comprehensive economic, financial and political oversight in over 200 countries world wide. The information, analysis and data which is collated by Global Insight is used by over 3500 clients world wide to support their decision making and planning processes.