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02/05/2007 - UK MORTGAGES
Parasol Network is pleased to announce that it is now an Authorised UK Mort...
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02/05/2007 - UK MORTGAGES
Parasol Network is pleased to announce that it is now an Authorised UK Mortgage Broker. Please call for further information
12/11/2006 - UK Interest Rates
Once again the Bank of England’s monetary policy committee (MPC) decided to raise rates this week by another quarter point, taking them to 5%, and it looks likely that the European Central Bank (ECB) will next month raise European rates next month by an equal quarter point, to 3.5%. With inflation running at 2.4% in the UK, (quite why so low when utility bills have been soaring), and house prices continuing to show no signs of slowing from their present 8.6% annual rise as measured by the Halifax, little wonder that the MPC acted. This begs the question of how much further they might have to rise as BOE Governor Mervyn King has already made clear his concern that inflation could top 3% by Christmas. The trouble with interest rate rises, though, is that they do take time to work through into the economy. We are seeing much higher levels of bankruptcies and, more particularly, of IVAs, the arrangement under which lenders agree to accept a part payment in return for wiping off debts. So the future for house price growth looks bleak indeed, for if the property market in the UK follows that of our American cousins across the pond, the latter of which has fallen 9% this year, then house prices will only fall if interest rates rise further. On the other hand, there are always those who ignore the dangers. At least five lenders have relaxed their mortgage lending criteria, contributing to a move among first time buyers to borrow on average 3.27 times their salaries in August, a new record that is set to be beaten month by month. Abbey National, the UK’s second largest mortgage lender, is now willing to offer up to five times a couple’s joint annual salaries. Multiples of four times salary are said to be commonplace. Whilst one sympathizes with first time buyers trying to get onto the increasingly slippery housing ladder, saddling them with unbearable debt does not sound like the answer, especially if interest rates are to go up further.
05/10/2006 - Global Interest Rates
The ECB (European Central Bank) raised interest in the eurozone today by 0.25% to 3.25%. This is the fifth time since December 2005 that rates have risen as they the (ECB)remain "strongly vigilent" with regard to inflation caused by rising prices. Many economists believe rates will hit 3.5% by the end of the year as the economic picture in Europe improves.
In the UK whilst rates remained unchanged at 4.75% it is widely anticipated that once the BOE inflation report is released on 17th Oct. that once again UK interest rates will need to rise to 5% come the next meeting scheduled for 9th Nov.The latest Office for National Statistics (ONS) figures showed that inflation was 2.5% in August, up from 2.4% the month before and above the government target of 2%.The Bank itself has raised the prospect that inflation could rise as high as 3% should fuel and commodity costs continue to rise.
Another key driver of UK rate decisions, the housing market, appears to be stronger than expected, with surveys in the past week from both Halifax and Nationwide indicating steep increases in average house prices.
In the US the chairman of the Federal Reserve Ben Bernanke has warned that inflation is still too high. Whilst Mr Bernanke gave no indication whether interest rates would be raised further he added that inflation remained a concern: "It is something we have to watch very carefully to make sure it does not rise or even remain where it is." After raising interest rates 17 times in a row, by a quarter of a percentage point, the Fed decided in August to keep it steady at 5.25%. Stock Market investors have obviously concluded that US interest rates have reached a peak as in recent trading sessions the US stockmarkets have surpassed there previous all time highs set back in early 2000 and US
30 year bond yields at 4.76% are beggining to price in that the future direction of US interest rates is downward.
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PREVIOUS NEWS ARTICLES:
12/09/2006 - US Trade Deficit
03/08/2006 - Global Interest Rtaes
20/07/2006 - Global Property Investors
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