UK Interest Rates – Base rate remains at 0.5%

The base rate may have stayed the same, but borrowers are starting to turn to fixed or capped rate mortgages as increases edge closer, says Simon Gammon, Head of Knight Frank Finance.

“This morning’s decision by the Bank of England’s Monetary Policy Committee (MPC) to keep the base rate on hold at 0.5% for the 22nd month running was very much as expected, but the pressure for an increase is starting to mount.

"Commentators on what the Bank of England will do next are very much split in opinion, but with inflation refusing to fall, the majority who were predicting no rate rises in 2011 now expect an increase at some point during the year. The fact that the economic recovery appears to have slowed will make the MPC cautious about raising rates too soon, but increasing inflation brings its own serious issues that cannot be ignored.

"Uncertainty about what will happen to interest rates is driving people to consider their options, especially with regards to their mortgages. With fixed rates now starting to edge up, now is a good time to review your borrowing.

"Knight Frank Finance is helping a growing number of clients to create bespoke products to give them the best options in the market. For example, a loan can be split into various lengths of fixed terms, while keeping some of it tracking the base rate. Another option for those who don’t want to fix is to opt for a capped mortgage, allowing continued tracking of the base rate with the security of a maximum rate, should rates rise."

Courtesy: Knight Frank

For further information, please contact:

Rosie Cade, Knight Frank Finance

Tel: +44 (0)207 861 1068

Email: [email protected]