Welcome to The Mortgage Guide UK
Why Interest Rates were increased again to 0.25% To the dismay of householders and industry, the Monetary Policy Committee unexpectedly increased interest rates for the third time in only 6 months. Interest rates now stand at 5.25%. Although the increase was only a quarter of 1%, it will add considerable financial burden to the UK’s …
The Bank recently announced a rise in interest rates to 5.25%. This was unexpected at the time, however inflation statistics a couple of days later seemed to entirely justify their decision. CPI inflation rose to an 11 year high of 3%. By historical standards 3% is not too bad, but the Bank of England will …
Continue reading “UK Inflation and Interest Rates both Rise”
An interest only mortgage is where people borrow money and pay monthly interest payments on it. They don’t make a contribution to paying off the Capital that they owe. The idea is that an interest only mortgage should work alongside another investment scheme which builds up equity to be able to pay off the mortgage …
Continue reading “Problems in Paying Back Interest Only Mortgages”
The Bank of England performs several tasks in the UK economy. 1. It issues notes and coins. The Bank of England is the sole issuer of notes and coins in the UK. In theory you could take a £10 note to the Bank of England and ask for you equivalent sum of Gold. I don’t …
The main instrument of UK monetary policy is the use of interest rates, set by the MPC. The theory is that interest rates are very effective in controlling inflationary pressures. The relative success of meeting the government’s inflation target in the past 7 years suggests that this proves the effectiveness of monetary policy.In brief raising …
Continue reading “How effective are interest rates in reducing inflation?”
Recent increases in the interest rate suggest that there are more increases on the way. Inflation has reached 3% which is at the upper limit of the Banks CPI inflation target. Furthermore the UK housing market appears as buoyant as ever. House prices continue to rise to record levels (£137,000+) With this backdrop of rising …
Continue reading “Have interest Rates in UK peaked already?”
Recently the governor of the Bank of England admitted UK monetary policy may have been responsible for encouraging a consumer credit boom and also boom in house prices. With many commentators arguing house prices are overvalued (House prices set to fall) a good question to ask is why didn’t the government and MPC do more …
Continue reading “To what extent does the Housing Market Effect Interest Rates?”
A recent surge in UK inflation from 2.7% to 3.1% has made future interest rate increases almost a certainty. It is the first time the Bank of England has missed its inflation target since independence. It meant that the governor Mervyn King had to write a letter of explanation to the Chancellor Gordon Brown. Part …
Continue reading “UK April Inflation threatens future interest rate Rises.”
Today, Thursday 10th May, the Bank of England increased interest rates to 5.5%. This is the highest rate since October 2001. Interest rates have increased by 2% since a low of 3.5% in 2003. The main reason for the increase in interest rates were: CPI Inflation increasing to 3.1%. This is just above the government’s …
Continue reading “Prospects for Interest Rates in the UK May 2007”
Interest rates are set by the Monetary Policy Committee, Bank of England. The MPC are independent from the government. Before 1997, interest rates used to be set by the Chancellor. It was argued, with a degree of justification, interest rates were subject to political motivation. The government now just sets the MPC an inflation target …
In recent months there has been a noticeable slowdown in UK house price growth. In the US, the Housing market is stuck in the doldrums with some areas seeing falling house prices. With the slowdown in the housing market, it is less likely that interest rates will have to rise any further. Furthermore recent inflation …
Continue reading “Mortgage Interest Rates Predictions for 2008”
Interest rates are the main tool for influencing economic activity and therefore affecting the inflation rate. In the UK, interest rates are set by the Bank of England Monetary Policy Committee MPC. In the US, interest rates are set by the federal Reserve. In the UK, the MPC have been set an inflation target of …
Interest rates can be confusing. There is a huge range of interest rates – anything from 0% a year to 2,000% on some extortionate pay day loans. Interest rates basically reflect the cost of borrowing money. The most important interest rate is the base rate (or repo Rate) set by the Bank of England. The …
source: BBC Interest rates could stay close to 0% for a long time, if the recession continues to worse and unemployment rises. The latest inflation forecast suggested CPI inflation will fall below the government’s target and stay around 1%. Since this rate is below the governments target this will keep interest rates low. However, despite …
Why Interest Rates were increased again to 0.25% To the dismay of householders and industry, the Monetary Policy Committee unexpectedly increased interest rates for the third time in only 6 months. Interest rates now stand at 5.25%. Although the increase was only a quarter of 1%, it will add considerable financial burden to the UK’s …
The Bank recently announced a rise in interest rates to 5.25%. This was unexpected at the time, however inflation statistics a couple of days later seemed to entirely justify their decision. CPI inflation rose to an 11 year high of 3%. By historical standards 3% is not too bad, but the Bank of England will …
Continue reading “UK Inflation and Interest Rates both Rise”
Recent increases in the interest rate suggest that there are more increases on the way. Inflation has reached 3% which is at the upper limit of the Banks CPI inflation target. Furthermore the UK housing market appears as buoyant as ever. House prices continue to rise to record levels (£137,000+) With this backdrop of rising …
Continue reading “Have interest Rates in UK peaked already?”
The main instrument of UK monetary policy is the use of interest rates, set by the MPC. The theory is that interest rates are very effective in controlling inflationary pressures. The relative success of meeting the government’s inflation target in the past 7 years suggests that this proves the effectiveness of monetary policy.In brief raising …
Continue reading “How effective are interest rates in reducing inflation?”
Interest rates have remained at record low of 0.5% since March 2009. Interest rates are likely to remain at 0.5% for the next several months because the economy is still struggling to recover from one of the longest recessions on record. In fact economists are now predicting that the current climate of ultra low interest …
There are many different interest rates in the economy for mortgages, personal loans, poor credit loans e.t.c. They are set by a range of banks and building societies. The Bank of England cannot directly control these but influences them indirectly through changing the BASE Rate. (or the REPO rate) How Bank of England determines Interest …
Continue reading “How Bank of England Sets Interest Rates in UK”
Interest rates are part of UK Monetary Policy. In the UK the objective of Monetary policy is the control of inflation. The Bank of England Monetary policy have an inflation target of CPI = 2%. Inflation can vary by 1% either way. In short the MPC’s primary objective is to keep inflation between 1% and …
Continue reading “Effects of Housing Markets on Interest Rates”
The latest date from the Office of national statistics shows that prices rose less than expected in the previous month. The CPI measure of inflation remained at 2.4%. The RPI (which includes housing costs) rose to 3.7%. However this was less than expected and in the Bank’s latest inflation report they reduced their inflation forecasts …
November 13th 2006 Summary: The effect of Rising interest rates on housing market and UK economy The Bank of England recently announced a rise in interest rates of just 0.25% but hinted that interest rates may rise as high as 6%. These rates are low compared with the early 1990s when within the ERM interest …
Continue reading “The effects of Rising interest rates on UK economy”