We have reviewed comments from many of the UK’s leading businesses and economists to try and determine the consolidated view for bank base rates in 2011 and 2012.

The historically low bank base rates of been of great benefit to borrowers and in particular those with loans and mortgages that track bank base rate (BBR).  The low BBR means that many consumers have more to spend due to lower cost of borrowing, this is a key consideration as the Government fiscal squeeze starts to have greater impact in 2011.

Most of the experts are pointing toward an increase in the latter part of 2011, probably in Q4, 2011.  The size of this increase seems to be around 0.25% to 0.5% based on the views of the majority of reports and comments we have read.

A key consideration is that any increase does not cause the economy to go back into recession.  Another factor is that wage inflation needs to be held back, should it start to rise significantly then BBR may have to increase further to counter inflationary effects.

Moving into 2012 many of the experts see some further increases (few mention figures) and give the indication that by the end of 2012 BBR will still be well below the historical norm.  This would suggest BBR perhaps at no more than 2% by end of 2012?  As we say, few are willing to mention specific figures as there are too many variables, the 2% figure is therefore difficult to forecast with any confidence.

Interestingly we found many experts of the opinion that lower BBR will be a factor for a considerable period, possibly another 3 or maybe 4 years.  Forecasting this far out is increasingly difficult but this must be good news for those with mortgages.