As the Bank of England has voted to keep the base rate at 0.5 per cent for the twelfth consecutive month, mortgage advisors John Charcol say this is good news for borrowers who will see rates continue to drop.

Now that the UK economy is no longer in recession, and mortgage rates have become more affordable, Ray Boulger, spokesperson for the independent mortgage advisory firm, believes the decisions on base rate and quantitative easing have become ‘all about the politics’.

The outcome of the next general election is likely to have a significant impact on the cost of mortgages, says Mr Boulger.

While the news that the base rate will remain at 0.5 per cent for at least another month comes as little surprise, Mr Boulger says it is still good news for borrowers, because “while bank rate remains dormant, mortgage rates continue to drift lower.”

While the interest rate has languished at this record low for a year, mortgages have gradually become more affordable, competition has increased, and higher loan to values have returned to the market.

Mr Boulger believes that continued economic uncertainty cannot be ignored, however, and suggests that tracker mortgages might still be the best choice for borrowers as interest rates are predicted to remain low for some time to come.

Even when the base rate does begin to rise, it would have to do so steeply and quickly to catch up with the cheapest fixed rates available at the moment, and therefore offset the benefit of a variable rate.

While the markets remain uncertain, Mr Boulger urges potential borrowers to seek advice about which mortgage options are best for their circumstances.

“The message for borrowers is simply that no generic advice will do. The political uncertainty may mean the right choice for some borrowers is to batten down the hatches and lock into a fixed rate for at least five years, but with the difference between these and the best tracker mortgages around 2.5%, there is a big premium for the security of a fixed rate,” he said.

“Seeking independent mortgage advice on your own specific situation has arguably never been more important.”

© Fair Investment Company Ltd

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