Brokers are confident the remortgage market will not suffer if base rate is held at 0.5 per cent until mid-2017, due to the emergence of cheap fixed rate mortgages and moves by several lenders to increase their standard variable rates.
This week, investment bank Citi predicted base rate will not rise until halfway through 2017, by which time it would have remained at 0.5 per cent for over eight years.
Citi previously forecast base rate will rise in 2016 but says it has revised this, given the uncertainty around a triple-dip recession, shrinking growth prospects and an under performing economy in 2013 and 2014.
It has cut its 2013 growth forecast from 0.8 per cent to 0.4 per cent and predicts that GDP will not get back to pre-recession levels until 2016.
John Charcol senior technical manager Ray Boulger says: “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.”