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News - Interest rate September - October 2007
October 3rd The likelyhood of a UK base rate rise moved even further away at the beginning of October as the latest monthly inflation and house price figures showed a leveling off. The Consumer Prices Index fell to 1.8% in August 2007 - well under the government's target of 2% although it doesn't include mortgage rates which have increased in response to the five hikes in base rate over the past year or so. Many financial commentators are speculating that the rate will drop to 5.5% before the end of the year. The housing market remains flat across the board with demand at the top of the range falling as city high-fliers worry about their bonuses in response to the continuing uneasiness in the money markets. Estate agents say the rest of the market is still quiet as buyers September 20th Since the recent financial market crisis, economists are no longer expecting the interest rate to rise to 6 per cent, as predicted for this autumn. It now seems unlikely that the Bank of England will risk further upsetting the vulnerable lending market, particularly after the Northern Rock problem. There is now the likelihood that the base interest rate in the UK may be cut following the US Federal Reserve Bank decision to cut rates by an unprecedented half a percent. This is seen by analysts as a strong signal that the 'Fed' is willing to intervene heavily to try and stabilise the money markets, helping to prevent a global recession. Coupled with the chancellor's guarantee to Northern Rock savers that their money is safe, this has calmed fears on both sides of the Atlantic and makes a cut in UK base rates to 5.5% possible this month. UK Mortgage interest is still costing more, several building societies
have already increased their Tracker mortgage payments by 0.1 and 0.2
per cent last week, despite the interest rate being held this month.
This is because banks are charging each other more to borrow. More Financial NewsPrevious Interest RatesHouse prices up - Demand downWealth Gap biggest for 40 yearsBrown promises three million more affordable housesImportant Checks Before You Sign Up For a LoanGetting a Loan when you have a bad history 'more difficult' say Lenders
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