The rate of interest that you pay on your mortgage is determined by the Bank of England, and the mortgage rates will go up or down depending on any number of economic factors.  The Bank of England’s monetary policy committee agree on the interest rates on a monthly basis, the economy as a whole is of major interest to any body who owns their own property.  One of the major driving forces behind the UK interest rates is the overall state of the UK economy, during periods of boom and when the economy is growing people have jobs and savings which can then be lent out to the borrowers through the financial institutions.  This in turn will enable more people to borrow and the mortgage interest rates will, if these trends continue, rise.  It is important that the bank of England keep good control over the level of the interest rates, if there is too much borrowing then this can destabilise the economy, on the other hand if there is not enough then the reverse can happen and the markets stagnate.  Generally when the demand for funds is low then the interest rates will fall. The mortgage calculator on this site will allow you to calculate monthly mortgage payments based on your chosen mortgage rates. The mortgage calculator is a pretty useful tool which instantly calculates your mortgage payments. 

If we take a look at the market today the current mortgage rates are determined by the base rate of interest and this is set at 5.25%.  This is not a high rate of interest however the UK economy has been enjoying great success over the last few years and enjoyed a low of just 3.5% from July to October 2003.  The UK home owner during this period would have been enjoying the best mortgage rates of interest, compare this to the mid to late 1980s where the base rate of interest was hovering around 15% which is very high and usually signifies that there is or was a recession.  Inflationary factors will also have a large influence on the amount of money which is loaned out and ultimately affect the mortgage rates, generally if there is uncertainty within the economy and inflation looks to be on the increase then the lenders will be more reluctant to lend money during that period of time and the lender will be looking to increase their rates.  In short this means that inflation drives interest rates higher and in turn you will be likely to see an increase in your current mortgage rate.

The UK economy though is not the only influence behind our mortgage interest rates, international economies can play a huge role in what happens within our own country.  Just recently the US markets have seen a large element of uncertainty within the housing sector which has led to a property price crash.  The cause of this decline is fundamentally attributed to the sub prime lenders and the investment banks, and the increase in the exposure to bad mortgage debt.  Some of the largest investment banks in the world have been hard hit by these problems to the tune of over eighteen billion pounds.  This has sparked an overhaul of how the banks have financed their lending for mortgages in the US and has had a direct effect on the UK markets.  The US Federal Reserve took the steps to lower their mortgage interest rates by three quarters of a percent to try to boost the economy, due to the problems in the US the world economies had to react.  As mentioned previously the UK lowered the interest rates and it is widely predicted that the UK mortgage rates could well drop to as far as four percent over the next 2 years.

In the next few months it is widely anticipated that the Bank of England will be looking to cut the interest rates lower maybe down by another quarter of a percent to 5%.  This will be a welcome relief to thousands of the UK homeowners who are experiencing ever increasing cost levels in the basics of life such as fuel and food.  If the rate does come down to 5% then this will be the best mortgage rates since November/December 2006.  The threat of a recession has forced the bank of England to lower the rates with affordability a real issue for many people the interest rate cuts will provide some breathing space.  The markets however still remain in a state of change and anything could happen and we are far from seeing the best mortgage rate when the base rate of interest was at 3.75%. The uncertainty in the markets does not directly affect anybody who has taken out a fixed rate mortgage, however there are expected to be many thousands of people who were on a five year fixed rate mortgage deals that may have enjoyed interest rate payments of 4% that will becoming to the end of their terms. To view the rest of the article click mortgage rate