London, UK (PRWEB) September 10, 2009
The Bank of England kept the base rate at 0.5% for the sixth month in a row today, bringing the promise of stability to the mortgage market.
At the same time, house prices are showing modest increases.
Chris Eagle, commercial manager at mortgage comparison website Creditchoices.co.uk, believes that base rate stability is a positive factor for anyone considering buying a house.
'Interest rates are likely to be steady into next year and house prices are showing modest increases,' he said.
'Prices were up 0.8% in August according to Halifax and prices are now back at the levels of the end of 2008.'
Eagle believes that interest rate stability will encourage lenders to introduce new mortgage deals to the market, and that there could be some reduction in mortgage rates.
'Mortgage rates have been high in relation to the low base rate,' he said. 'This on-going stability will give banks some 'wiggle room' to make their mortgage products more attractive and competitive.
'Last week we saw HSBC launch a two-year tracker at just 1.99%. While it hasn't forced a mortgage price war, it does mean that lenders are now willing to lower their rates selectively and introduce new products.
'There is still a lack of property on the market, but for those with a good deposit available, this could be a prime time to consider entering the mortgage market. Given the new mortgage deals coming onto the market every day, however, it is important that prospective buyers compare mortgages to make sure they've got the best deal possible.
'In addition, they must be mindful about their long-term ability to pay a mortgage, particularly a variable rate mortgage, when interest rates start to tick up again.
'Most analysts don't expect that to happen before the middle of 2010 and, even then, sharp rises in the base rate are not expected. However, as a mortgage is a long-term commitment, house buyers need to take into account the effect of higher rates on their monthly repayments.'
Notes to editors:
CreditChoices.co.uk was launched in 2005 and offers comprehensive and impartial advice on mortgages, credit cards, loans, savings and current accounts.
The website is part of ConsumerChoices.co.uk, a group of websites which provide informative guides, pricing information and advice to support consumers' decision-making.