The Bank of England has again held the base rate of interest at 0.5%, maintaining the lowest rate in the history of the base rate for over 3 years. This announcement follows an interesting piece of news coming out of the Bank this week around predictions over what may happen with mortgage rates in the coming three months.
The quarterly Credit Conditions Survey is undertaken by the Bank of England, and asks UK lenders about lending over the previous quarter, and also to predict what they think will happen with lending over the next three months. The Bank’s brief to maintain monetary and financial stability drives the survey.
Lenders have forecast that mortgage rates will continue to fall based upon increased competition amongst banks and building societies, and pending deadlines to lend money they have borrowed from the Bank of England under the Funding for Lending scheme. The scheme means lower rates for lenders that they can pass onto customers.
For contractors looking to buy property or remortgage this year, this presents very positive news. Many lenders are coming close to the point where they cannot continue to drop rates without hampering profits and cash reserves. This means they will look at relaxing certain aspects of lending criteria, which is welcome news for contractors who have borne the brunt of conservative lending criteria since the onset of the credit crisis.
This year has seen new lenders actively looking to design criteria and mortgage packages for those they deem to be ‘professionals’, a tag usually reserved for doctors, lawyers and chartered accountants. Contractors who work in IT, Engineering, Management Accountancy, and Interim Management to name but a few, have historically been excluded from the preferential rates and flexible lending criteria available to the traditional professional occupations.
This is now changing, and 2013 has seen the most positive changes to the contractor mortgage market for almost 6 years. As larger lenders continue to examine their criteria and look for opportunities to lend to what they deem ‘good’ risk profiles, there are great opportunities for low rates and sensible affordability assessment.
Yet again, the base rate announcement from the Bank of England takes second stage to more encouraging news about the mortgage market.
Article by: Taj Kang, Operations Director at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
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