Mortgage rates 'could still fall further'

Cheaper mortgages could still become available in the market, despite the low Bank of England base rate, it has been claimed.

Interest rates have remained at 0.5 per cent since March 2009 as the bank has attempted to stimulate an economic recovery, but this has given lenders precious little room for manoeuvre.

However, Ben Wilkie, editor at What Mortgage, said it is "certainly possible" that increased competition could see rates fall further.

He noted that the market is "already getting fairly competitive", but the longer the base rate stays low, the more confidence lenders will gain.

That said, Mr Wilkie did warn consumers that the base rate will increase eventually, whether this is after 18 months or five years.

"Eighteen months is quite a long time, but most experts now think – unless something horrible happens – that it is going to remain very low for a lot longer than most people expected it to," he said.

The Centre for Economics and Business Research predicted this week that average UK house prices are likely to rise by 5.3 per cent in 2010.

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2010-05-06 13:23:00 © Moneyextra.com