Cheaper mortgage costs 'due to low base rate'

The low Bank of England base rate has been "a saving grace" for many households over the last year-and-a-half, it has been claimed.

According to Paula John, editor of yourmortgage.co.uk, the 0.5 per cent interest rate has helped increase the availability of cheap mortgages.

She noted that the knock-on effects have kept many people's housing costs low since the start of the recession.

"People on fixed rates mortgages haven't been affected, but [they] tend to have fixed on reasonably low rates anyway," Ms John commented.

"Those on variable rates have benefitted from the interest rates remaining low. The only hope is that they stay low for as long as possible."

Mr John claimed that many mortgagees have been overpaying during the downturn in a bid to increase the proportion of their house they own.

"A very easy way of doing that is simply maintaining your mortgage payments at the normal level when the interest rate goes down," she added.

The Bank of England has frozen its base rate at 0.5 per cent since March 2009, with few commentators predicting a rise before 2011.

Moneyextra.com recommends you take independent financial advice before acting on any article

Back

2010-06-29 13:32:49 © Moneyextra.com