The reaction of the mortgage market to the Bank of England’s decision to hold interest rates at 0.5% has been generally positive but uncertainty about the future still abounds.
Steve Griffiths, head of sales and distribution at Kensington, said the Bank of England’s interest rate decision came as little surprise.
He said: “It’s no surprise that the base rate continues to remain at its historic low level this month, given the current uncertainty in the financial markets.
“It’s likely that this uncertainty will continue to linger over the coming weeks and months, and we could even see rates fall further.”
Griffiths also said the hold gave advisers the chance to boost business levels by contacting old customers.
“In this environment of change, it’s important that advisers use every opportunity they can to contact their books and offer advice to their clients,” he added. “That not only means speaking to customers who meet the standard mortgage criteria, but also those whose financial circumstances could prevent them from going to high street lenders. This group, in particular, will need expert advice to successfully navigate the mortgage market during these uncertain times.”
Meanwhile Mark Sismey-Durrant, chief executive officer at Hampshire Trust Bank, said that it was more important to keep faith in the markets now then ever.
He said: “While many were expecting interest rates to be cut, it seems the market must continue to wait for the Bank of England to put measures in place to stimulate the UK economy following the EU Referendum.
“During this period of economic upheaval, SMEs and consumers alike should remain steadfast about the UK economy and have confidence that it will recover in the longer-term.
“Both companies and consumers need to be shopping around for a savings account that delivers a consistent and competitive level of interest. By doing so, they can continue to invest their money and find opportunities to grow their money for the future.”
Simon Checkley, managing director of Private Finance, was quick to praise the decision to keep rates at the current level.
“We fully support today’s decision by the MPC to hold the Bank Rate at 0.5% whilst it waits for the longer term impacts of the EU Referendum result to become clearer,” he said.
“We anticipate a further review in August once the new economic forecasts are published where we would expect the committee to cut rates by as much as 50 bp, achieving a zero percent interest rate, which would be in line with Mark Carney’s most recent comments about the need for the implementation of monetary easing over the summer.
“Despite the current economic uncertainty that has led to a very quiet London housing market, the Private Finance message is that the prospects for house buyers are still favourable, as more property has come onto the market following Brexit and rates are at all-time lows.
“With regards to specific mortgage deals, borrowers must not underestimate the effect of a low interest rate alongside the devalued pound, loose monetary policy and what is anticipated to be a more liberated economy; all of which combined are a sure sign of a future rise in inflation.
“Private Finance advises new and existing borrowers to fix their mortgage rate now while lenders are still offering competitive deals.”