No change to interest rates this month

The Bank of England has announced that there will be no rise in interest rates this month following the Monetary Policy Committee meeting. Interest rates have gone up five times in the past year by 0.25% each time taking the rate from 4.5% last August to 5.75% in July.

However, homeowners on variable rate mortgages will be relieved to know that the interest rate will remain stable on 5.75% for now. This had already been widely predicted by analysts, although most predict that there will be a further interest rate rise to at least 6% before the end of the year.

Inflation levels are still above the government's target, which is why many are predicting that there will be a further interest rate rise in order to bring inflation under control.

One analyst stated: "For now we look for a September rate rise with the growing threat of a further move around the turn of the year."

However, other experts feel that the peak of the rises has been reached, with one economist stating: "Our forecast remains that the peak in rates has been reached."

Although the hold on interest rates may only be a temporary reprieve, many homeowners will be relieved, as it gives them some breathing space to try and get to grips with the last interest rate rise, which was applied only last month. The five rises so far have impacted hugely on repayments for those with larger mortgages, and many could find themselves tipped over the edge financially if and when another interest rate rise is applied.

One homeowner in the Midlands stated: "If there had been another rate rise this month I really don’t know what I would have done. I know that there could still be another rise around the corner, but at least I can rest easy for at least another month or so."

Tom Smith
7th August 2007

Recent Mortgage News:

• Buy-to-let Considerations [07.08.07]
  Buy-To-Let investments have become really popular in Britain in recent years. As interest rates on savings have fallen, and as pension funds have been raided and endowments have dwindled, Brits have turned to property to make money
  
• London's Coolest Property Spot [06.08.07]
  The rising prices of houses have left those searching for their first homes in a difficult position as affordability has reached its highest ever level. Nevertheless, recent research has revealed that some exciting deals can be found if people extend their searches.
  
• Government Plans Massive House Building Programme [02.08.07]
  A Green Paper is expected to reveal how the Government plans to ease Britain’s property problems. It could be the most radical attempt to influence the housing industry since the building boom of the ‘60s.
  
• Mortgage Demand Slows [01.08.07]
  It appears that higher interest are pushing a bigger dent into the demand for mortgages and forcing down the rate of house price increases at last. Two sets of figures issued today suggest that the housing market slowdown has arrived.
  
• Forecast Group Says House Prices Will Stagnate In 2008 [01.08.07]
  A leading forecast group in the housing market has predicted that the housing market will come to a jarring stop next year at a point when the interest rate rises finally start to have a real impact on people’s budgets
• HIPs: Doubts Still Remain [06.08.07]
  Home Information Packs (HIPs) became law on 1 August, but concerns remain that house sales might be delayed because there is still a shortage of home inspectors in some areas. There are also niggling doubts about a number of loopholes that exist in the system that will allow some avoidance of the packs.
  
• Property Market Round-Up [02.08.07]
  Property prices have had a good run for their money - they have been rising steadily since 1997 and have outstripped all other potential investments.
  
• Next three months to be turbulent for fixed rate customers [01.08.07]
  The next three months are set to be very turbulent ones for hundreds of thousands of UK consumers that signed up to fixed rate deals on their mortgages two or three years ago. In the past year interest rates have rocketed from 4.5% to 5.75%, with five rate rises of 0.25% each.