As expected the Bank of England Base Rate has again remained at 0.5%, there is now a general consensus from many Industry Experts that we are likely to see a significant base rate increase in 2011.

Now is an ideal time to review your mortgage options whether you are a current mortgage holder or considering purchasing.

More than two thirds of respondents to a Fair Investment Company survey think it will have risen by this time next year.

According to a recent poll, 30 per cent of respondents said they thought the base rate would stay the same, while 69 per cent thought it would rise with 38 per cent predicting a rise to one per cent and 28 per cent predicting a rise to 1.5 per cent. Just three per cent thought it would be two per cent or higher.

Nick Scarrett, head of investment and pensions at Fair Investment Company, said:

“Back in July, most analysts were firmly of the view that the base rate would have to remain on hold for the foreseeable future, with Ernst and Young’s ITEM forecast predicting no change until at least the end of 2013.

“At the time, the only senior economist to have predicted an earlier rise was former Bank of England deputy governor, Sir John Gieve, but now, it seems many more analysts agree that we will see sharp rises much earlier than originally predicted.”

Taj Kang, Associate Director at Contractor Mortgages Made Easy commented “Contractors looking to borrower should take advantage of low loan and mortgage rates and think about over paying if they can afford to in order to take years and/or capital off their loan”

Additionally, The housing market failed to match seasonal trends in July.

56,000 mortgages worth £8.4bn for house purchase were advanced in July, up from 52,000 in June and 53,000 for the same period of 2009.

Traditionally July is a strong month and, despite the seasonal increase in activity the volumes still represented a very weak market.

Lending to homemovers jumped 13% in volume in July to 36,900 loans and 15% in value to £6bn compared to June. This was up 11% in volume and 20% in value from July 2009.

Homemovers, like first-time buyers, have also seen their average deposits rise from 33% in June to 35% in July, yet mortgage payments as a percentage of income have held steady at 9.6%, still the lowest shares since the early 1970s.

Repayment mortgages remained very much in favour in July, with 90% of first-time buyers taking out a repayment deal compared to 67% in July 2007, and 72% of home movers and 70% of remortgages also choosing a full repayment mortgage.

Richard Sexton, director of business development at e.surv, said: “It’s bad news that overall house purchase lending was so weak in July, but the good news is that’s not turned out to be a UK wide phenomenon.

“The health of Britain’s property market differs very significantly across the regions. For instance, over the year to August 2010, e.surv carried out 15.4% fewer surveys and valuations in Northern Ireland compared to the year before, but 25% more in London. We carried out 14.4% more in the East Midlands and 1.8% fewer in Scotland.

“Whilst headline national figures are interesting, it would be foolish to think house purchase activity is uniform across the UK.”

Taj Kang, Associate Director at Contractor Mortgages Made Easy commented “The fall could have something to do with the tightening of loan criteria after an easing in the early part of the year”.

Author Bio: This article has been submitted by Contractor Mortgages Made Easy

Category: Finances
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