mortgage interest rates

The Governor is hinting at a move in interest rates.

Mark Carney, the Governor of the Bank of England, has hinted that a rise in interest rates could come sooner than expected.

The Bank of England base rate, which is currently set at 0.5%, indicates to banks what lending and savings rates should be. For the last five years the base rate has not changed whilst the UK economy recovered from the recession. Indicators such as falling unemployment and increasing average wages are suggesting that the economy is recovering stronger than predicted, which has led to a re-think in interest rates.

If interest rates do start to rise many people who are on tracker rate mortgages would start to see their mortgage payments go up. Those who have fixed in their mortgage payments would be safe until their fixed rate comes to an end, as follow-on rates are likely to be more expensive.

This is a response to curb house prices rising too quickly in an effort to avoid a ‘housing bubble’. Mr Carney has suggested that any raise in interest rates would be slow and over a period of years so as not to stunt the recovery.

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