Bank of England maintains interest rate freeze

By Natasha Adamson

The Monetary Policy Committee of the Bank of England has voted once again to maintain the interest rate freeze at 0.5 per cent, meaning we could reach a full six years of the record low rate.

The base rate was dropped to 0.5 per cent in March 2009, and while there was speculation that it could go up before the end of 2014 it has remained unchanged and few expect it to increase in the first quarter of 2015. That means we are likely to reach a full six years of the low rate, which many property owners have been able to take advantage of in order to increase their equity share in their property. Home owners in Northern Ireland in particular, with the large negative equity problem created after the property crash in 2007, have seized their chance to overpay on their mortgage while their monthly payments are relatively low in order to reduce the amount of negative equity in the property.

Negative equity occurs when the loan secured against the property is worth more than the value of the property itself. House prices in Northern Ireland dropped by as much as 50 per cent in many areas after the property crash, so those who bought at the height of the boom find themselves unable to sell or remortgage their property as they can't cover the shortfall to pay off their existing loan.

Economists now expect that interest rates will remain unchanged into the second quarter of 2015 at least, giving property owners yet more breathing space. However, borrowers are being urged to consider getting locked into a fixed rate deal sooner rather than later.

If you are buying a property in Northern Ireland, or selling or remortgaging an existing house you own, contact one of the conveyancing solicitors at Wilson Nesbitt in Belfast for information and advice by calling 0800 840 9290.