Experts have suggested that interest rates in the UK will stay low for several years to come, the Daily Express has reported. Mortgage holders will hope that this will result in lower mortgages over the same period.
Last week the Bank of England held the base rate at its record low of 0.5 per cent for the seventh month in a row. Economics experts have said that it is likely to stay that low throughout the whole of 2010.
The Centre for Economics and Business Research (CEBR) has predicted that the base rate will stay below 2 per cent until 2014. In such an economic environment home buyers and owners would hope to benefit in terms of cheaper deals as building societies and banks entice customers with lower mortgage rates.
The past week has seen a flurry of activity in mortgage rates as Northern Rock, Barclays, HSBC, Abbey, and Alliance & Leicester (the latter two both owned by Spanish firm Santander) have tussled for the top of the Best Buy tables.
Whereas the Centre?s forecast may come as good news to mortgage holders, it will mean more misery for beleaguered savers who will continue to see poor returns on savings. Nevertheless, ongoing low rates should continue to push the housing market back up.
Darren Cook of Moneyfacts.co.uk said a full-blown mortgage war could result, and went on: ?If 10 to 15 banks and building societies come to the party and put better deals on the table, that would be good news for owners, buyers and the property market in general.? Mr Cook thought that there could be a rush to take advantage of low rates if lenders believed they would stay low.
?We need to see more lenders offering deals under two per cent, especially those who want to see the return of re-mortgagers. That market is almost at a standstill as people transfer to their lender?s Standard Variable Rate and stay there because it?s not worth their while remortgaging,? he added.