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Cheap mortgages still possible despite constant interest rates

Date: Thu, 18 Aug 2005

The Bank of England may not be planning more interest rate cuts but cheap mortgages are still on offer.

Just a few weeks ago, experts were predicting that interest rates would fall to 4.25 per cent before the start of 2006, however, new economic data makes this look less likely.

Inflation has reached an eight-year high and crept above the Bank of England's target rate for the first time. The bank's usual response would be to raise interest rates to counterbalance the inflation rises, however, concerns over consumer spending mean this is not yet possible.

In addition, the minutes of the recent Monetary Policy Committee (MPC) meeting show that the decision to reduce interest rates was not universally popular – with five members of the MPC voting for the drop and four arguing to keep rates the same.

However, house buyers are unlikely to see a significant change in the competition between home loan lenders and, with a bit of shopping around, they should be able to secure a cheap mortgage offer.


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