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Base mortgage rate to stay at 05 until 2015

April 26, 2012

Base mortgage rate to stay at 05 until 2015

The majority of economists believe that [mortgages](/mortgages.htm”>mortgage</a> rates will stay at 0.5 per cent until 2014, but Ray Boulger, senior technical manager at investment adviser Jogn Charcol, believes it could stay that way even longer, possibly until 2015.

Rates have come down due to low bank rates that, in turn, lower swap rates.

This in particular is causing a drop in five-year fixed-rate mortgages due to a fall in gilt yields, which are closely connected to the base rate.

"Five-year fixed-rates haven't increased as much - the ones that have gone up more are the shorter-term deals," said Mr Boulger.

"The key driver for fixed-rate pricing is swap rates, and five-year swap rates are quite close to all-time lows."

Fixed-rates did bottom out at the turn of the year, but have slowly been recuperating. This means they look very bad on a 12-month basis but over a three-month cycle it looks much more positive.

The average five-year fixed-rate mortgage dropped from 5.59 per cent to 4.86 per cent year-on-year, according to figures from Moneyfacts.co.uk.

This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.

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