The fears of a deep and prolonged recession have eased, according to the Bank of England, as inflation is expected to level off more quickly than predicted this year. This has led to industry experts forecasting that five year fixed rate mortgage deals will soon fall to below 4%, after spiking to well over 6% this autumn.
The Financial Times reports that mortgage lenders will be quick to respond to the improved economic conditions by offering much more competitive deals than have been available for the previous six months. This is welcome news for first time buyers and for those who are seeking to renew their mortgage in the near future.
Despite the Bank of England raising interest rates for the tenth consecutive time in a row, the general consensus is that inflation has peaked, and will start to fall during the rest of the year. Interest rates have gone up by half a percentage point to 4%, the highest level since the financial crisis of 2008.
However, energy prices have fallen faster than expected, and the UK economy has proved more resilient than was first feared. Although a technical recession is still likely, it is predicted to be short and mild, with a 0.5% fall rather than a sharper 1.5% fall in economic growth.
In an interview with Sky News, Andrew Bailey, governor of the Bank of England,said: “I do see the signs that we’re turning a corner, and that obviously is encouraging but there’s a long way to go. There’s still some very big risks out there. We’re going to take each game as it comes and look at the evidence very closely.”
Commenting on whether wage rises could hamper the fall of inflation, he added: “What happens going forwards on wage setting will be very important and we’ll be watching it very closely because that will be an important indicator of whether the very sharp downward path of inflation will happen.”
On the subject of mortgage rates, Mr Bailey told Sky News that the outlook was generally more positive too: He was “hoping that we’ll see much more stability in the interest rate curve off of which mortgages are priced off. That evidence is helpful, but there are a lot of people who don’t immediately benefit from that.”
Anyone who is seeking a new mortgage deal this year is advised to shop around to find the most competitive products, as lenders can vary significantly in their charges, and also in the way that they assess affordability criteria.
An experienced mortgage advisor can be an invaluable resource at this time, because they will have instant access to a comprehensive range of lenders who may not be easy to source independently. This is especially true for anyone with non standard circumstances, such as self employment or an adverse credit history.
If you are looking for a mortgage broker in Wood Green, please get in touch today.
