Many economists are predicting interest rates to be cut further to zero over the next few months in an attempt by the Government and the Bank of England to get consumers spending again to kick start the economy.
With interest rates currently at 2% and likely to drop there is little incentive for consumers to save their money with the measure of inflation, the Consumer Price Index (CPI), showing inflation at 4.5%. If rates were to drop lower it’ll drag down savings rates, quite possibly below the inflation rate meaning consumers savings could actually be worth less as time goes on and lose money.
However with the country in recession (not officially announced but with five months negative growth a six month almost guaranteed. Recession defined as two equal two consecutive quarters of negative growth) consumers are also very concerned about job security and likely to continue to safe until the situation improves.
Savings were said to be around 10% of income as an average for the nation one year ago however in recent months this has actually turn into a negative. However the good news for mortgage owners is mortgage rates will certainly improve as MPs continue to put pressure on mortgage providers pass on any further rate cuts as they have been reported doing since the November rate cuts.
Although the number of mortgage products are still at an all time low and mortgage lenders have tightened their criteria for borrowers. Good deals are available for those who can afford a decent deposit. Your chances of obtaining a mortgage are greatly improved if you can provide a 25% deposit. It will also mean you can get a mortgage at a decent interest rate as the deposit will give you many more options than opposed to those who don’t have savings to offer.
Mortgage rates can be compared by using the services of a mortgage broker. Find one that will check the whole of the mortgage market to ensure you can compare all the options available to you. With the recent interest rate cuts you could save money on your current mortgage rate as not all providers have passed both rate cuts on in full.
