| The short answer is: 'No-one knows', but that's not | | | | 14.88%, a jump of 7.5%, in just 16 months. If this |
| what you're looking for. The long answer is more | | | | happened again, a 25-year variable-rate |
| complicated, and the subject of much discussion - but | | | | £150,000 mortgage - currently costing around |
| here are a few of the important factors: | | | | £900 a month at 5% - could jump to over |
| 1) The falling base rate | | | | £1,600 if the base rate reached 12.5%. |
| At 0.5% (as of March 5th), the Bank of England's base | | | | There's no way of knowing if the same thing could |
| rate is about as low as it can go. | | | | happen again, but few people who were paying a |
| "The bank rate doesn't have to go to zero, because | | | | variable-rate mortgage 20 years are likely to have |
| we're getting to the point where it doesn't make a | | | | forgotten what it felt like at the time! |
| great deal of difference where it is." | | | | A lot of economists seem to expect the base rate to |
| Mervyn King, Governor of the Bank of England | | | | stay low for the next year or so - but a lot of |
| In theory, it could drop another 0.5% to zero, but it | | | | mortgagors are sure to make sure they find a good |
| seems Mr King doesn't necessarily expect it to. In | | | | fixed rate before the year is over. |
| other words, mortgage lenders aren't going to face | | | | 3) The availability of credit |
| many more calls to 'pass on' base rate cuts to their | | | | If you're a would-be first-time buyer saving up for a |
| customers. | | | | deposit, you'll be watching house prices closely. The |
| And of course, the phrase 'pass on' does miss the | | | | good news is, they're coming down; the bad news is, |
| point, as the Bank of England isn't the only source of | | | | they're coming down (partly) because so many people |
| funding for mortgage providers, so there's no reason | | | | (perhaps including you) can't get a mortgage. As long |
| to expect them to match cuts to the base rate point | | | | as mortgage availability remains low, your best chance |
| for point. There's even reason to believe that interest | | | | of getting a mortgage is to put down a sizeable |
| rates on fixed-rate mortgages have fallen as far as | | | | deposit. |
| they're going to - and have started rising again. | | | | If there's no way you can do that, you'll have to move |
| 2) The unexpected | | | | quickly a few months / years from now. |
| Back in 1988-89, the base rate shot from 7.38% to | | | | |