Interest Rates Held Again

Interest Rates Held Again.

The Monetary Policy Committee at the Bank of England has again voted to keep interest rates held at 0.5%pa.

It is now 4 years and 7 months that the rate has been at 0.5%.  It seems like yesterday, but the globe is still sat in the doldrums trying to fight its way out of the deepest recession we have ever known.

That said, various market commentators are still predicting a house price boom on the back of Help to Buy schemes, low interest rates and confidence in the property market.  We have seen figures banded around that property prices inflation over the next 4 years could be on average around 7%pa.  Trend property inflation over the last 100 years or so has been around 8% pa, so we see this as reasonable given that the population is increasing so supply is short and demand is high.

We expect interest rates to remain lower for around another 2 years but any real action on rates takes place.  In this time your property could have increased in value by 25% - 33% by then.

The future on interest rates

As already detailed, we do not see interest rates changing dramatically for the next 2-3 years.  However, as inflation builds, property prices increase, wages rise and unemployment falls, you will see pressure on the Bank of England to try and control a boom.