Expectations for a change in the Bank of England’s Monetary Policy Committee’s (MPC) standard base interest rate has been put off until 2017 by investment bank Citi.  Citi has forecasted that the rate will not change until the middle of 2017 which will mean the rate will have set unchanged at 0.5% for over an eight year period.  The current rate is set by other experts to remain unchanged until at least 2014 with the economy still in a weak state and threats looming of a triple-dip recession.

Citi also has cut the economic growth forecast that they previously had set at 0.8 per cent to half that at 0.4 per cent.  The do not believe the economy will recover to pre-recession levels until the year 2016.

Currently the mortgage and remortgage lending market has shown that the Funding for Lending Scheme put into place in August by the Bank of England has been having a positive impact.  Lenders noted in a polled survey by the Bank that the scheme had enabled them to keep loans at low interest rate levels and to extend more lending than previously expected.  The survey also revealed that lenders intend to extend even more mortgage and remortgage loans within the first quarter of the year.

John Charcol senior technical manager Ray Boulger remarked, “It is important rates stay low because whenever you get a recession it clearly has a negative impact on people’s ability to pay their mortgage.

“I do not think the low base rate will hit the remortgage market because we have a combination of fixed rates falling sharply and a number of lenders increasing their SVRs.”