Expectation is now that there will be no change in this until Autumn 2015. The date of the first rise keeps getting pushed back which is good news on one hand as it keep rates lower for longer - but does mean that the economy is not doing as well as we hoped so it's a double-edged sword. The delay is attributed this time to low inflation, weak wage growth and troubles in the Eurozone.
From a purely mortgage point of view, this is good news as lower interest rates mean lower monthly payments but it is just delaying the inevitable! Apart from making my previous predictions look premature, the economy is just not doing as well as was hoped or expected and this is not so promising and is the reason the projections have changed somewhat.
The key areas:
Inflation - Consumer Prices Index inflation dropped to 1.2% in September. It has not been this low for a decade. With inflation so low, there is simply no pressure to raise interest rates to control spending.
Unemployment - Over the last 3 months this has averaged 6%. This is the lowest level since late 2008.
Growth - Needless to say this is lower than expected
Wages - Rose just 1% in the year to August and as this is below inflation, raising interest rates would make life even more difficult for everyone.
House Prices - Up 0.5% in October according to Nationwide Building Society - meaning an average annual increase of 9%. Definitely a slowdown over the last quarter and so the need to cool the market by raising rates has been alleviated.
So what does all this mean to you?
1. Borrowing money will be cheaper for longer
2. 2 year fixed rates are on average 1% lower than in 2012
3. The 2 year fixed rates with a 10% deposit are the lowest on record
4. Now is a great time to get a fixed rate
It would seem that cheap money for borrowers is going to stay with us for a little longer and it is the ideal time to take advantage of this.
For advice on any of these areas, please do not hesitate to call me on 0844 736 1920 and I will be happy to help in any way I can.
And remember, your home is at risk if you do not keep up repayments on your mortgage.