Posts with tag: mortgage borrowers

UK Interest Rates May Not Rise Until 2020, Believe Analysts

Published On: February 10, 2016 at 12:24 pm


Categories: Finance News

Tags: ,,,,

Insecurity in global markets and a weakening US economy will force the Bank of England (BoE) to delay interest rate rises until at least 2020, according to leading industry analysts.

The Economist Intelligence Unit’s (EIU) prediction adds at least three years to the BoE’s timeline for the first increase from the historically low rate of 0.5%.

The forecast will be welcome news for mortgage borrowers, but will disappoint savers.

UK Interest Rates May Not Rise Until 2020, Believe Analysts

UK Interest Rates May Not Rise Until 2020, Believe Analysts

Most analysts expect the first rise in the base rate for almost seven years to arrive at the end of this year or in early 2017.

The Governor of the BoE, Mark Carney, announced in January that the UK faced “a powerful set of forces” that prevented policymakers from increasing rates.

However, in his quarterly inflation report briefing, Carney said that interest rates were “more likely than not” to go up over the next two years1.

Two analysts at the EIU, Danielle Haralambous and Aengus Collins, believe Carney’s announcement is at odds with the downbeat evaluation in the inflation report.

They said: “We now expect record low interest rates to remain in place in the UK for at least the next four years.”

In the past week, the BoE has downgraded the UK’s expected GDP growth for 2016, and indicated that inflation will remain low this year and in 2017.

The EIU analysts found that downward adjustments to official growth expectations reveal that the loss of momentum last year was sharper than anticipated.

They also argued that the UK suffers from “unresolved structural weaknesses” that would prevent wages from rising and from putting pressure on prices.

They reported: “The vulnerability of the UK recovery, combined with the more decisively dovish tone at the BoE, has led to a significant change in our call on monetary policy. We no longer expect tightening for the next four years at least.”

The decision to maintain low rates will remain, despite a build up in inflationary pressures, they added.

The analysts concluded: “The BoE is likely to delay policy tightening in 2019, largely on the basis of our forecasts that the US will experience a downturn in 2019, and rising levels of indebtedness in China will have become a greater source of risk by the end of our forecast period. Our view is that the next increase in interest rates will come in mid-2020.”1 

If rates do not rise until 2020, how will your financial position change?


Parents Using Their Children as Guarantors

Published On: May 20, 2015 at 10:24 am


Categories: Landlord News

Tags: ,,,

Older mortgage borrowers who have been refused a deal from their lender have to rely on their sons and daughters for help.

More and more over-50s are asking their children to be guarantors on their mortgage, after they failed the strict new lending rules when remortgaging.

Parents Using Their Children as Guarantors

Parents Using Their Children as Guarantors

Guarantors are in place to meet the costs if the borrower defaults on their mortgage repayments.

Experts say that parents have to “demean themselves”1 because banks are reluctant to lend into retirement, as they worry borrowers’ pensions will not be sufficient to cover the payments.

Recent research from the National Association of Estate Agents (NAEA) revealed that a third of its agents have seen clients experiencing age discrimination from lenders.

This shocking fact arrives after the introduction of tougher lending rules in April 2014, when mortgage providers were required to prove their customers could afford their loans.

But some banks have taken these requirements too far and are now discriminating against older borrowers, even when they have a solid pension.

Mortgage broker John Charcol’s Ray Boulger says: “Often we find that the parent can actually afford the mortgage, but the lender will not take their income into account simply because of age.”1

Lisa Harris, of retirement specialists Saga, insists: “These rules need an urgent review.”1 

However, banks say they need clarity on which lenders they can approve loans for, as lending into retirement can be risky.