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Investment property buyers warned low base rate 'isn't the norm'
Investment property buyers in the UK have been warned the currently low base rate on mortgage products is not normal.
Paula John, editor at Your Mortgage, said: "I think there is a danger that the longer we have this extremely low base rate environment, more people will start to think that this is the norm - which it isn't."
She explained while the Bank of England base rate currently stands at the historically low figure of 0.5%, it is much more usual for it to be at around the 5% mark and therefore investment property buyers should ensure they do not get used to these low rates.
Ms John added there is a danger that the longer the 0.5% figure is in place, the more homeowners will begin to forget it is usually much higher.
Her comments come in response to a recent report by chief economist at Policy Exchange Andrew Lilico, who suggested interest rates may have to rise to 8% over the next two years in order to keep inflation down.
Posted by Sarah Smith
Paula John, editor at Your Mortgage, said: "I think there is a danger that the longer we have this extremely low base rate environment, more people will start to think that this is the norm - which it isn't."
She explained while the Bank of England base rate currently stands at the historically low figure of 0.5%, it is much more usual for it to be at around the 5% mark and therefore investment property buyers should ensure they do not get used to these low rates.
Ms John added there is a danger that the longer the 0.5% figure is in place, the more homeowners will begin to forget it is usually much higher.
Her comments come in response to a recent report by chief economist at Policy Exchange Andrew Lilico, who suggested interest rates may have to rise to 8% over the next two years in order to keep inflation down.
Posted by Sarah Smith
Wed, 25th Aug 2010