When did base rates last change? Where were mortgage rates in 1991? And how has the cost of borrowing on credit changed in the last 10 years? See how past base rate changes affect mortgage and credit card interest rates since 1991.
Base Rates are at a historically very low, with the bank of england wavering on reducing the rate from 4.75% (July 05). Your mortgage is probably quite affordable now, but what would happen if it increased to levels last seen at the start of the 90's? The base rate was around 10% at that time and the mortgage rate was higher still. If interest rates went back up to that level then the repayments on a 130K mortgage would increase from around £800 a month to over £1400. Would you be able to afford this??
However an increase in interests rates to that level is quite unlikely at the moment, the bank of england is keen to avoid a housing market crash, and to do that they need to keep interest rates low.
The money markets are quite good at prediciting which way mortgage rates are going, if you look at the 'Historical Mortgage Rates' data below you can see that changes in mortgage rates generally slightly preceed changes to the base rate. If you look at the present day you can see mortgage rates are going down, indicating that the finanical market expects a cut in the base rate soon. Now would probably be a good time to pick up a ong term fixed mortgage. Note that the rates quoted are typical 'standard variable rates', there are cheaper discounted mortgages available.
Credit card interest rates also follow the base rate, but as you can see from the 'Historical Credit Card Interest Rate' data the overall interest rate is much,much higher. Instead of being the base rate + 1%, credit card interest rates are more like the base rate + 10%! Obviously using a credit card to borrow money is an expensive way of doing things.
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Date Added: Thursday 8th May 2008
"Where will I find details of mortgage rates from 1948 to the present day? "
John Wingett
Date Added: Friday 28th March 2008
"Your financial know how may be sound, but your written English is appalling!What about getting someone to check your spg. (spelling punctuation and grammer!)"
Vic Hoggard