Posted 12 August, 2013 OBI BLOG
Bank of England governor Mark Carney has said that the Bank will not consider raising interest rates until the level of unemployment has fallen to 7% or below.
Current unemployment stands at 7.8% and the creation of 750,000 jobs would result in the 7% position. This level is not a target but a point to re-examine the rate. Experts envisage this to happen in 2016.
It is also forecast that the Consumer Price Index (CPI) measure of inflation was likely to be at its target rate of 2.0% during 2015. The rate of CPI increased to a 14 month high of 2.9% in June, up from 2.7% in May.
Whilst Mark Carneys words will not be greeted with delight by savers, it does show a positive future for those borrowing. With greater certainty over interest rates, there is a more positive outlook for borrowers particularly those borrowing against property interests.
Gary Scorah, Investment Director at OBI Property believes that with the base rate fixed at 0.5% for the foreseeable future, homeowners will be encouraged to take out new mortgage offers which are likely to arise from the recent decision. This decision is further positive news for house builders who were already feeling a more positive outlook.
The decision will also be felt positively in the commercial sector and with interest rates being held at an all-time low for the medium-term, private investors and property companies will be encouraged by the news. The past 3-4 years of the lack of Banks lending has resulted in a poor market in the sub £3m sector, which could be buoyed by the recent decision.