Mortgage rates: A ‘Calculator’ Declining Trend?
It appears that mortgage rates will not rise further in the near future after the Bank of England Governor, Mark Carney, changed his “forward guidance” earlier this week, indicating that rates would remain low despite a fall in unemployment.
David Hollingworth of London & Country said: “His remarks took the worry out of some of the talk of near-term increases in rates. We had seen a flurry of increases in the rates of five-year fixed mortgages earlier this year, but those appear to have gone through the system.”
Ray Boulger at rival broker John Charcol agreed, saying: “I don’t think we’re going to see mortgage rates rise much in the short term. There’s no great pressure on lenders to put rates up.”
However, bank rate is not the only factor influencing mortgage rates, and Mr Boulger cited new, tougher lending rules, applying from April, as having a possible impact.
“If lenders decide they are attracting more business than they want or can deal with, they may put up rates,” he said. “All the lenders are saying they are ready for the changes but it’s likely that a couple may need to restrict the amount of business they write. The easiest way to do that is to increase rates.”
Mr Boulger added: “Overall, mortgage rates are likely to be slightly higher in 12 months’ time than they are now, because we’ll be that much closer to an eventual base rate rise.
“But I don’t think there’s any danger that rates will shoot up – Mr Carney emphasized this week that when rates do go up, they will move slowly.”