Economists are painting a picture of unchanged interest rates by the Bank of England’s Monetary Policy Committee (MPC) in 2012 and by some into 2013.  Due to stagnant growth predictions they are forecasting that the MPC will leave the standard base interest rate unchanged at 0.5 per cent.  Homeowners that had been considering a remortgage may think these forecasts are a license to continue playing the wait and see game.  They believe if the MPC leaves the Bank set rate unchanged that lenders will leave their rates unchanged and this is simply not true.

Those homeowners that are paying an interest rate based on their lender’s variable rate having had their mortgage deal expire could be sitting in a situation that will prove to be very risky.  Lenders change their variable rate at will and can do so outside of what the MPC decides to do.  With the current crisis developing in the eurozone this could cause lenders to move their variable rate upward and to pull their best remortgage deals off of the market and replace them with higher interest rates.

Economists do not believe there will be enough economic recovery and growth to handle more expensive lending so the MPC will leave the standard base interest rate untouched possibly through 2013.  They also are forecasting that there will be a decline in the inflation rate next year below the goal level of 2.0 per cent.  Inflation currently sits at 5.0 per cent.  Mervyn King, governor of the Bank of England reported in his quarterly inflation report that it should fall below the goal rate by the middle of next year.