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The Bank of England’s Monetary Policy Committee has voted to keep the base rate on hold at 0.5%.
They  also opted to maintain the size of the Asset Purchase Programme at £200bn.
Interest rates have been on hold at 0.5% since March 2009.

Six members of the MPC voted to keep the base rate at its historic low of 0.5% in May, while Andrew Sentance opted to increase it by 0.5% and Spencer Dale and Martin Weale voted for a 0.25% hike, as they did in April.
Regarding the stock of asset purchases, eight members of the MPC voted in favour of keeping it on hold in May, while Adam Posen voted to increase it by £50bn as he did the previous month.
Ben Thompson, managing director of Legal & General Mortgage Club, says: “The gap between bank rate and inflation may be widening but there are precious few other indicators that provide a rationale for increasing BBR from its current rock bottom levels.
“The Bank remains in the thick of it; on the one hand needing to ensure that a sustainable economic recovery is baked in, on the other hand ensuring it does not lose its credibility as an independent rate setter that is capable of maintaining a controlled and low inflation economy. It’s a tough one that, but the recovery has to come first.”

Coventry Intermediaries is providing further support to first time buyers with the launch of a totally unique ERC free 5 year fixed rate mortgage at 90% loan-to-value. This new product stands out in a market where the majority of first time buyer fixed rate products are limited to 2 years.

With uncertainty over when interest rates will move and by how much, a first time buyer mortgage that provides certainty over 5 years is the responsible option, ensuring your client’s repayments aren’t affected by a very different interest rate environment in only a couple of years time.

Furthermore, this product comes with the added benefit of not having any ERCs, providing your client with the flexibility of being able to overpay or change product without penalty.

Designed to support first time buyers

It’s not just about the rate, it’s about certainty. Coventry’s new first time buyer product is designed to give borrowers the best start in their first home:

Skipton Building Society has launched a new 95% LTV mortgage that is available through selected intermediaries.
The mortgage is a two-year fix at 5.99% with no completion fee and an application fee of £195, while remortgage customers are offered free valuation and legal fees.

Kris Brewster, head of products at Skipton, says: “This new 95% LTV product follows on from our re-launch back into this market last year and is a big reduction on the previous products we had available.

“This demonstrates our commitment to helping borrowers in this segment and is the latest in a series of innovative solutions we have offered over the past 12 months, to help borrowers overcome some of the continued challenges posed by the financial markets and economy.”

The average house price in the UK fell by 0.2% in April to reach £165,609, according to Nationwide’s monthly house price index.

The value of houses has gone down by 1.3% compared to April last year, but Robert Gardner, chief economist at Nationwide, points out prices rose by 0.6% according to the three month on three month measure, which he says is a better indicator of what going on.
“Gardner says house prices have increased and decreased over three month periods since November 2010 but this pattern is not unusual when the market is fairly static.
He adds: “There is still little evidence to suggest that price declines will accelerate in the months ahead.
“While the UK economy only managed a modest bounce-back at the start of the year, after the weather-induced contraction in late 2010, the economic recovery is expected to gather momentum.”

With the Bank of England threatening to raise its base rates experts are warning that it is time for homeowners to fix their mortgages.

Ben Wilkie, editor at What Mortgage, suggested that UK home owners are anticipating a rise in interest rates in the near future and are choosing to protect themselves by moving on to a fixed rate mortgage now.

He also warned those already on a fixed rate whose terms may be coming to an end that a shift to a variable interest rate may give them a shock.

Mr Wilkie explained that between the price being paid on a current fixed rate and that on a variable there could be “a huge amount of difference” for those not expecting the sharp jump and told consumers to keep their eye on the market.

Gross mortgage lending in February was £9.5 billion, the Council of Mortgage Lenders recently reported, continuing a year of slow growth in the availability of funds for those looking for a new house.

The Bank of England has chosen to hold base rate at 0.5%, despite being under pressure to hike interest rates as inflation spirals. Read the rest of this entry »

The average interest rate on a two-year tracker mortgage has dropped to its lowest level for over 20 years, while the average two-year fixed rate mortgage has increased to its highest level in almost a year, show latest figures from Moneyfacts.co.uk.
The average rate on a two-year tracker mortgage is now 3.40%, while the average rate on a two-year fixed rate mortgage has increased to 4.59%.
Michelle Slade, financial analyst for Moneyfacts.co.uk, says some borrowers have taken a wait and see approach over the last two years, preferring to remain on a lenders standard variable rate rather than move to a more expensive mortgage deal.

She says: “Talk of an imminent base rate rise has caused a surge in the demand for new mortgage deals.
“Lender’s appear to be trying to tempt borrowers off record low SVRs on to new tracker deals instead.
“Rates on tracker deals continue to be more competitive than fixed rate deals, but borrowers need to ensure they factor in the effect of any base rate rises on their monthly repayment when considering a new deal.
“The rise in swap rates appears to have plateaued, but the rise in fixed rates continues – albeit at a slower pace than a few months ago.
“Borrowers looking for a fixed rate mortgage need to act fast as deals are only in the market for an average of two weeks.”

The Council of Mortgage Lenders has this week reported mortgage lending remained low in January.
Mortgage lending fell by 13% in January compared with December to £9.2 billion – the lowest level for a year, according to the CML.
However, it was a 5% rise on January 2010 levels – the first year-on-year increase since August 2010, said the Council.
The CML has previously said the housing market will remain subdued in 2011, due to uncertainty surrounding the economy and the ongoing mortgage rationing by lenders.

Taylor Wimpey is offering first-time buyers up to 95% LTV mortgages on a number of its developments in the East Midlands, East Anglia and East London.
The deal is being offered in conjunction with Melton Mowbray Building Society and Saffron Building Society.The new mortgages will have rates between 5.49% and 5.99% fixed for two years.

Pete Redfern, group chief executive at Taylor Wimpey, says: “We have been working hard to secure this mortgage deal which we believe will make all the difference to those who aspire to own their own home but find it difficult to save for the large deposits needed.
“Discussions are at an advanced stage with other lenders to support this initiative as part of a range of practical and workable solutions to get more first time buyers moving.”
The news comes on the same day that housing minister Grant Shapps is chairing an emergency summit in London with mortgage lenders, house builders and other industry leaders to find a solution to the first-time buyer crisis.
The Council of Mortgage Lenders estimates that the average age of a first-time buyer not receiving financial help from family is 36. This is largely due to the size of deposit now required by lenders which has trebled in the last 10 years.
Michael Coogan, director general of the CML, is attending the summit, he says: “It is good to see ministers taking the initiative to discuss how we can look to improve market conditions for first-time buyers. But no-one will be surprised to learn that there is no simple quick fix for a market that has changed fundamentally since the credit crunch.
“Creative approaches have a role to play in helping to turn market stability into market recovery, and lenders look forward to working constructively both with government and the housebuilding industry as we look to help create the kind of conditions conducive to responsible innovation.”

Abbey for Intermediaries lauches new 90% LTV mortgage. 

The two-year fixed rate of 6.19% has a £599 fee, available with the Homebuyer Solution. It has also reduced the arrangemnet fee on its three-year fixed rate mortgage at 90% LTV to £495.

The mortgage has a rate of 6.89% and also comes with the Homebuyer Solution, which offers borrowers a free basic mortgage valuation and £250 cashback on completion.
Alan Mathewson, managing director of Abbey for Intermediaries, says: “We are committed to supporting the housing market and first-time buyers, and expect there to be strong demand from intermediaries and their clients for this highly competitive new deal.
’Borrowers looking to take advantage of a longer-term fixed rate will also be able to benefit from the £500 fee reduction on our three-year fix.”