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Home  »News  »Finance News

Mortgages 'to remain stable'

26/07/2010

The housing market has seen a strange few years because of the economic uncertainly and worries over interest rate rises. But, according the latest Ernst & Young ITEM Club forecast, interests rates are unlikely to rise from the current level of 0.5 per cent until at least 2014, providing the expected government spending cuts come to fruition. "A base rate of 0.5 per cent will begin to look like the new normal," according to Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club. This extended period of low interest rates will help make having a mortgage "very affordable" for those with sufficient deposits, said Lucian Cook, director at real estate service provider Savills. He added that the expected low rates confirm that the mortgage market is now underpinned by people's ability to access an adequate deposit, rather than their capability to afford a mortgage. "In the current environment, it is not whether they can service the mortgage; it is whether they can raise the deposit to move. There has been a shift from mortgage interest affordability to deposit affordability," he added. Make sure you visit our financial offers page for the latest deals available. Posted by Jez Walters

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