Could the BoE provide a shock Christmas present?

Could the Bank of England (BoE) provide a shock Christmas present to borrowers? asks John Charcol

“There have been renewed calls for an immediate cut in interest rates over the last few days, providing borrowers with a much needed boost before Christmas. Whether or not this will happen is almost anyone’s guess at present, but the minutes of this month’s meeting, due to be published next week, will be key in identifying the chances. If the vote was tight then there is clearly every chance that they may fall in December, but if it was still 8-1 in favour of a hold then I suspect that will filter through to December. We will just have to wait and see,” says Drew Wotherspoon of John Charcol.

“What does appear to be clear now is the only way for interest rates now is down, which is always a welcome message in the majority of UK households.”

So what product should I take?

“As ever, the first decision you must make is whether you need the absolute security that a fixed rate provides. If you do, then Abbey’s two-year fix and Nationwide’s five-year fix appear to be the current cream of the crop. Both rates, however, are still above 5.5% and there is currently much better value to be found in the tracker and discount markets, with rates starting at around 5.1%. Of course, these rates are already available now, even without a reduction in rates which we are expecting soon. With many suggesting that interest rates will hit 5.25% some time next year, the rate on John Charcol’s exclusive best buy two-year tracker will be 4.59%, a whole 1% better than the best current fixed rate.

“In the present market though, no-one can categorically say they know exactly what will happen next, so getting advice tailored specifically to you has never been more important. I would strongly advise anyone looking to take a new mortgage now to seek some professional advice from across the market. What is right for one borrower may well not be right for the next,” concludes Wotherspoon.