What next for UK mortgage rates?
As UK base rates remain unchanged at 0.5% after yesterday's MPC meeting many people are now asking how this will impact upon the UK mortgage market. Will mortgage rates remain low? Will they move higher? What other factors will impact upon mortgage rates in the UK?
While there is no doubt that the fact that UK base rates will remain at 0.5% for the foreseeable future will be of some assistance to the UK mortgage market it is perhaps not as simple as that. The prevailing mortgage rates in the UK will depend upon liquidity in the market place, demand and the risk factor. So while maintaining UK base rates at 0.5% is very welcome it is unlikely to have a major impact upon mortgage rates in the short to medium term.
It will be interesting to see whether competition increases in the UK mortgage market because there are some who feel that the property sector will take a slight downturn in 2010 and indeed there are concerns about 2011. While liquidity and competition in the UK mortgage market will play major roles in dictating the underlying rate, it is the state and the future prospects for the UK housing market which will ultimately decide the direction of UK mortgage rates in the short, medium and longer term.
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