Last week the Government announced a cut in the Bank of England base rate to 3.75%. A figure not seen since the 1950's.
Whilst it is usual for savings and mortgage interest rates to also follow suit, mortgage lenders appear to have been reluctant to cut their rates. With the housing market in such a boom at the moment, many lenders believe that if they cut their mortgage interest rates, it will only add more to the boom.
If interest rates for borrowing are cheaper, people are inclined to borrow more. If interest rates then rise, people who borrowed more than they could realistically afford might end up in trouble.
Tip: If you are looking to borrow money, take current interest rates out of the equation for a while. Imagine if intererst rates were 2, 3 or 4% higher. Could you still afford the repayments? If not, consider borrowing less. Make sure you will be able to afford the borrowings you take on.
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