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Bank Of England Governor Hints At Earlier Base Rate Hike

Bank Of England Governor Hints At Earlier Base Rate Hike

Is Mark Carney Eager To Raise Interest Rates?

The Governor of the Bank of England (BoE), Mark Carney, has drawn further criticism from economists after giving another mixed signal on the timing of any base rate increase away from the current historic low.

In an interview with the Sunday Times newspaper Mr Carney took great care to big up the health of the nation’s economy and insisted that the Bank of England would not wait for employed peoples wages to catch-up with the cost of living before hiking interest rates.

Mr Carney told the Sunday Times: “Wherever the finish line was in the depths of the crisis, we are much more than halfway towards that finish line now. The expansion is proceeding, momentum is more assured. The very fact we have had consistent quarters of growth in line with, or slightly better than, our forecasts shows that. We have to have the confidence that prospective real wages are going to be growing sustainably, before raising interest rates, we don’t have to wait for the fact of that turn to raise them.”

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Are You Sat On A Property Time Bomb?

Are You Sat On A Property Time Bomb?

How Can Property Investors And Landlords

Avoid The Property Time Bomb?

As we keep telling you, NOW really is a fantastic time to be investing in UK property, finance is more available, there are plenty of property deals out there and property prices are rising! Many people are beginning to think that we may even be entering a new property boom!

However, is this really good news for existing landlords?

You see, this situation could cause a really BIG problem for any existing landlords and property investors who own rental properties.

Rising property prices will contribute to inflation, which in turn will probably trigger the Bank of England (BoE) to raise interest rates to slow down the economy and this is the potential time bomb if you currently have investment properties.

The issue is that most property investors have become very used to the low Bank of England base rate of 0.5% which, means the repayment rate for many Buy-To-Let mortgages has been around the 2% to 3% mark.

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Bank of England Base Rate To Remain AT 0.5%

Bank of England Base Rate To Remain AT 0.5%

The Bank of England’s (BoE) Monetary Policy Committee (MPC) again voted to maintain the bank base rate at 0.5% last week.

The MPC have agreed to keep the bank rate at 0.5% for the foreseeable future.

The bank rate has stayed at 0.5% since 5 March 2009, a long-term low of over three and a half years. This means that interest rates on savings are low, but that in some instances mortgage payments have become lower and more affordable.

The Monetary Policy Committee also voted to continue with its programme of asset purchases totalling £375 Billion (GBP), financed by the issuance of central bank reserves.

According to the Bank of England, the Committee expects the announced programme of asset purchases to take another month to complete, and that the scale of the programme will be kept under review.

The last previous change in the size of the Asset Purchase programme was an increase of £50 Billion (GBP) to £375 Billion (GBP) on 5 July 2012.

 

For newer investors…..

 

What is the MPC?

MPC stands for Monetary Policy Committee. There are 9 members on the committee; the Bank of England governor, the two Deputy Governors, the Bank’s Chief economist, the Executive Director for Markets and four external members appointed by the Chancellor. Each member has an expertise in the field of economics and monetary policy and they meet once a month to set the interest rate.

What is the base rate?

The base rate is the interest rate set by the Bank of England for lending to other banks. This is determined at the Monetary Policy Committee monthly meeting.

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