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Borrowers earn interest rate reprieve - 5 April 2007

UK mortgage-holders had some cheering Easter news Thursday, as the Bank of England voted to hold the base rate of interest at 5.25 per cent for the second month in a row. This decision will keep the outgoings of the mortgage-bound British public steady for another month, but experts have warned that a further rise to 5.5 per cent at next month’s meeting is highly likely.

Against a backdrop of a strong month for retail sales and an enduringly buoyant domestic housing market, this hold in rates was welcomed by industry leaders, though with some caution, as concerns over inflation were also raised. The base rate of inflation rose again last month to 2.8 per cent, leading some industry analysts to predict that the vote was probably the result of a split decision.

Ray Boulger, or mortgage adviser John Charcol said that the Bank’s Monetary Policy Committee (MPC) wouldn’t necessarily raise rates in May, given what happened in last month’s vote. In March, the MPC voted eight to one to hold rates at 5.25 per cent, with one member in favour of a rate cut.

Others feel that the reduced volatility of the stock markets will lead the MPC to raise rates in an attempt to slow inflation, unless worries over the US economy continue to fuel concerns over the possibility of a wider global economic contraction.

This is good news for those looking to buy property overseas through re-financing their UK property assets, who should still be able to get a good deal on mortgages. That good deal should be made all the easier by news from Halifax suggesting that house price inflation for March stood at 11.1 per cent.

For information on financing your dream property overseas, along with details of the other things you need to think about when purchasing overseas, listen to our On Demand Radio Show on the Essential Checklist now!

 

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