Interest rate has peaked and can only go down, says Charcol

06 August 2007
In light of the Monetary Policy Committee’s decision not to change the Bank of England’s base rate this month, independent mortgage adviser Charcol says that 5.75% is probably the top of the scale and the rate will only go down.

Fixed rates on mortgages will not rise any more, Charcol predicts, and will creep downwards whilst still remaining pricey for borrowers.

Ray Boulger of Charcol.co.uk said on the 2nd of August when the decision was announced: “Today’s decision by the MPC is the first in many months that will bring cheer to the UK’s mortgage borrowers. A simple hold would not normally bring sighs of content around the country, but today’s decision may well signify that rates have reached their peak and that the next movement in bank rate will be downward, albeit not until next year.

"Some very encouraging news last month came from the minutes of the last MPC meeting, which highlighted the fact that most of the impact from the previous five bank rate rises has still yet to be felt in the housing market.”

This is put down to borrowers sheltering from the immediate effects of rises by short-term fixed rate deals, but as an increasing number come to the end of these agreements, the cumulative impact on borrowers will be significant.

“Whilst predicting interest rate movements is far from an exact science,” Mr Boulger continued, “I would say that the argument for the current 5.75% being the peak is now stronger than the one that calls for more rises…Even if the bank rate does move up another quarter percent, which certainly looks less likely than a month ago, trackers will still offer better value.”

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