Last week saw the latest Bank of England Monetary Policy Committee, (MPC) Meeting take place to decide the future direction of interest rates. Although they voted again for no change this month, things are starting to get tense as two of the members voted for an immediate rise, so the final vote was 7-2.
This shows that we are edging ever closer to another rise, with May or August the favourites.
In fact, one member of the MPC went a bit further with Gertjan Vlieghe stating that we are likely to see “one or two” rises each year, with rates reaching 2% by March 2021. This view is given weight by the fact that wage growth is starting to pick up as official figures showed that average earnings were 2.6% up in the three months to January. This is the quickest pace of rises since 2015.
Although inflation did drop to 2.7%, this is still above their 2% target and wage rises will put more pressure on this.
The “spanner in the works” however, could be coming not just from Brexit, but from Mr Trump across the pond. His latest protectionist view and imposition of trade tariffs against the EU and China will no doubt be met with a tit-for-tat response that could threaten economic growth.
We will see how all this plays out, but in the meantime the mortgage world is still crazy with competition between lenders fierce. One area lenders are looking at more often now is in the higher loan-to-value loans and there is now a plethora of products around at not just 90% LTV, where rates start from just 1.84% for a 2-year fixed, (3.67% APRC), but also at 95% LTV.
In the general rate world, 2-year fixes are available at 1.24%, (3.83% APRC) and 5-year fixes from 1.79%, (3.25% APRC) whilst variable tracker rates are around from 1.24%, (3.57% APRC).
Those looking at a Buy-To-Let can still obtain products from just 1.39%, (4.47% APRC) for a 2-year fix.