You are here: Home - Mortgages - First Time Buyer - News -

Mortgage rates keep rising despite base rate hold

0
Written by: Lana Clements
18/05/2018
Mortgage rates have continued to rise, even though the Bank of England kept the base rate on hold this month, data has revealed.

The average two-year fixed-rate this week hit 2.53%, the highest level since July 2016, according to data site Moneyfacts.

Monetary policymakers maintained the base rate at 0.5% in May, with just two of the nine committee members voting to increase rates. However, the bank said rates were likely to increase if the economy grew, in line with markets still expecting a hike to come this year.

And it appears lenders are not moving to drop rates back.

Bank could raise rates in August

Earlier this year policymakers had hinted that rates could rise sooner and faster than markets were expecting.

Lenders responded by gradually increasing rates in the weeks leading up to the May rate announcement.

However, the bank opted to hold rates, following a spate of disappointing economic data, but could act again in August if it appears growth is buoyant.

The performance of the economy will now be closely monitored for clues on whether the Monetary Policy Committee (MPC) will hike sooner or later.

Four rises in 18 months

Jonathan Loynes, chief economist at Capital Economics, said: “The bout of softer-than-expected inflation and activity data which caused the MPC to step back from hiking Bank Rate in May is certainly reason for caution.

“But like the MPC, we think that temporary factors were behind the slowdown, and suspect that growth will bounce back in Q2.

“If we are right in thinking that growth will surprise on the upside over the rest of the year, interest rates would surely rise by more than the very modest tightening – of just one hike this year and next – that is currently priced into financial markets.

“Indeed, we expect two hikes this year, and a further two in 2019, taking Bank Rate to 1.5%.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
FTSE sets new record but slips back in early trading

The FTSE 100 index triumphed in reaching a new high last night but it pulled back this morning off the...

Close