MILLIONS of homeowners were handed a huge boost today when new Bank of England Governor Mark Carney indicated that interest rates will stay rooted at record lows for at least three years.
The former Bank of Canada chief said the cost of borrowing will only be raised from its “emergency” level of 0.5% when the rate of unemployment falls below 7% compared with the current level of 7.8%.This is not projected to happen in official forecasts until the third quarter of 2016, well after the next election.It means homeowners who have a mortgage can plan their personal finances in reasonable confidence that their monthly interest bills will not go up.
Peter Rollings, CEO of estate agent Marsh & Parsons: “With his statement today Mark Carney has given the UK’s housing market a significant boost. The London market, in particular, is presently underpinned by rising positive sentiment due in part to the Government’s Funding for Lending Scheme and the Help to Buy initiatives as well as strong demand from home and abroad. Growth in the country’s GDP, reduction in unemployment and a feeling that we are finally out of the economic badlands means that the market can now be assured of certainty as far as interest rates are concerned.
“This is a highly important statement which will allow lenders to offer attractive fixed rate deals to potential buyers and will surely lead to greater demand and activity in both the resale market and provide a fillip for first time buyers. The Governor is implicitly saying interest rates will not rise until ¾ million more people are in work. This will give the market across the UK much welcome stability.”
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