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UK Lending Rates Frozen Despite Rising House Prices

With house prices jumping 1.7% in August, the annual rate of inflation in the UK rose to 7.7%. The good news for UK home loan borrowers, however, was the decision by the Bank of England not to follow its surprise jump in base rate lending and to freeze base rate of lending at 4.75% - at least for another month.

UK Lending Rates Frozen Despite Rising House PricesHowever, with the average cost of property in the UK now reaching the lofty heights of £197,631, according to the latest figures released by the Department of Communities and Local Government (DCLG), and with inflation continuing to rise, many UK home loan borrowers may well be wondering whether things can remain this way when the Bank of England comes to re-evaluate the situation in November.

One bright spot on what is otherwise a cloudy skyline was yet another fall in UK credit card debt last month, which many economists are attributing to the decision by the Bank of England to freeze the base rate lending rate.

Further good news may come in the form of the onset of winter, with higher energy and utility bills curbing many potential property buyers from buying right now and holding off until the spring. If that’s the case, we may well see house prices in the UK steadying and inflation coming under control, which in turn should hopefully hold off any interest rate rise the Bank of England is contemplating.

Nevertheless, with average UK property prices rising 12.8% in value this year, and with long-term predictions being that property prices in the UK can only go up, many in the UK will no doubt be wondering how much longer it can be before that take the plunge and buy property, regardless of what the Bank of England decides the base rate is going to be.

What’s more, if you currently own your own home in the UK and are looking to restructure some of your high cost outstanding unsecured credit, such as your credit card bills, with lower costing secured credit by re-mortgaging the equity value in your UK home, now might well be a very good time to be thinking of taking this bold move as you may well find that a number of the UK’s leading home loan providers are willing to offer you very attractive fixed rate term interest rates, despite uncertain times ahead as far as UK interest rates go, in order to secure your business.

Indeed, even if you are not looking to free up some of the equity in your home to pay your UK credit card debt, this still might be a good time to be thinking about taking up some of those attractive fixed rate term UK home loan offers out there and secured your home loan interest rate during a period where variable mortgage interest rates may be on the rise in the UK.

Richard Smith
10th October 2006


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