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TODAY'S OTHER NEWS

No rate hike until 2017

The mortgage industry faces months or years of the increasingly tiresome "will they, won't they" interest rate hike game after a dovish report by the Bank of England yesterday.

The Bank's quarterly inflation report downgraded price growth expectations and warned that the emerging market slowdown would hit global growth.

Earlier this week the National Institute for Economic and Social Research predicted a rate hike in February but governor Mark Carney's dovish commentary yesterday suggested that the first hike is much further away.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “We have been saying for months that the economy is not strong enough to cope with a rate rise and finally the Bank of England has admitted that this is the case."

Harris said the downwards pressure on mortgage rates will continue. “We have already seen some exceptional mortgage deals in recent months, and we are likely to do so again.”

Jeremy Duncombe, director, Legal & General Mortgage Club, warned mortgage holders against being lulled into a false sense of security.

“Even a gradual rate rise of 25 basis points will turn up the repayment pressure on many homeowners.

“Banks will begin pricing in a rise in the base rate before it happens, due to its effect on their costs. This leaves borrowers with even less time than they think to prepare for a rate rise.”

Steve Griffiths, head of sales and distribution at Kensington, said the argument for raising the rate is gaining traction.

“An expected upswing in inflation, along with low unemployment figures and rising wages, paint a positive picture for monetary policy normalisation.

“This has clear implications for mortgage holders, whom could see their payments increase over the next few months.

“We are now in the window of opportunity for brokers to get in touch with their clients and grow their remortgage business.”​

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