House price growth remains unchecked
Ray Boulger senior technical manager at Charcol said that the boom time for borrowers was set to continue for a while as the Base Rate would have to rise by around 2 per cent if it was to have a significant impact on the housing market, but tis was unlikely to happen as it would damage other areas of the economy.
“Despite rapid house price inflation for several years now, the MPC has been very successful in keeping the government’s target inflation index within the 1.5 to 3.5 per cent target range with only relatively small adjustments in Base Rate. The experience of the last few years demonstrates that, contrary to the traditional theory, an exuberant housing market and rising inflation are not always natural bedfellows.
“The historical good time for mortgage borrowers looks set to continue at least for the near future. The best capped rates, particularly over a 3-5 year period, are offering excellent value in relation to their fixed counterparts, and for the first time in a long while, a significant number of borrowers are choosing capped over fixed rates. In addition, the best of the discounts continue to deliver attractively low pay rates.”