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Experts forecast no change to record low base rate until 2014


A survey of mortgage brokers by United Trust Bank has revealed the majority of UK mortgage holders believe the low base rate is set to continue. Two-thirds of respondents anticipated that the Bank of England would maintain its 0.5% base rate until 2014.

This record low level has persisted since March 2009, with the overwhelming majority of those intermediaries taking part indicating they had no reason to anticipate any change until at least 2014. A further 22% were optimistic that this inertia would persist until 2015. Of the brokers surveyed, 8% said they expected the base rate to fall even further.

Harley Kagan, the managing director of United Trust Bank, described how the Bank of England’s Monetary Policy Committee (MPC) had held this 0.5% base rate for 43 consecutive months. This was an unprecedented period, and the broker community were largely content with the trend. He stated: “We’re unlikely to see a change for at least another year. Under the leadership of new Governor Mark Carney it is expected that the MPC will continue with its low-interest rate policy”. Kagan added that borrowers would undoubtedly be hoping Carney would continue to steer the same course as his predecessor after stepping into his shoes in June 2013. He concluded: “Savers would welcome their nest eggs working a little harder.”

The 0.5% rate has meant low mortgage payments for millions of UK borrowers whose home loans are tied to the central interest rate. Many are on base rate trackers, while some are with lenders whose standard variable rates are also linked to the base rate.

The editor of new homes portal, Keith Osborne, reiterated Kagan’s sentiments, suggesting that the economy’s fragile state was likely to promote consistency rather than provoke any dramatic change.

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