The Bank of England has reported in it's quarterly inflation report that it has become more concerned about the slowing pace of the British economy. This is due to the turmoil in the world's financial markets. This means there is a risk of a 'bigger downturn' than previously expected.
City analysts predict that this could mean interest rates dropping from 5.75% to maybe as low as 5.0% next year. This would bring much needed relief to mortgage payers, who have seen mortgage rates climb from 4.5% over the last year and a bit.
Many mortgage payers are also just about to end fixed rate deals set much lower than the current 5.75% and could end up having to pay as much as 40% more in monthly payments. Any rates cuts would be welcomed by this group.
The first rate cut might be as early as February, but will be dependent on official figures backing up expectations particularly in the housing market.
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