Wednesday, August 14, 2013
Bank Governor Mark Carney indicated rates would remain low till 2016 but the markets are pricing in an earlier increase, with implications for borrowers. The rates at which banks lend to one another - usually a key indicator of the future direction of fixed rate mortgage rates - have been rising in recent weeks, in spite of Bank Governor Mark Carney's clear "guidance" that the Bank would cap rates until 2016. The interbank rates reflect the demand for and cost of money changing hands between large institutions. These are rising, suggesting market participants are not convinced by Mark Carney's commitment made on August 7 to keep rates low until certain economic conditions - notably unemployment targets - were met. Five year swap rates have risen by a greater 21pc.