Low interest rates could stay until after the election: New Bank of England governor hopes announcement will help encourage economic recovery

Interest rates could stay low until after election
Bank of England Governor hopes it will boost consumer confidence
Business leaders welcome move

The Bank of England today looks set to announce that interest rates could stay at record lows until after the General Election.

Mark Carney, who succeeded Lord King as Governor last month having been hand-picked for the job by George Osborne, is expected to reassure the public that rates will not rise anytime soon.

The Canadian hopes the use of so-called ‘forward guidance’ will boost confidence among households and businesses and help drive the economic recovery.

The Chancellor will also hope that rock bottom borrowing costs between now and polling day in 2015 will bolster Tory chances as house prices rise and optimism returns.

On the radio they said he'd announced he wouldn't increase interest rates until employment dropped to 7% which, "Might take 3 years".

Oops! Yes, it should say 'unemployment'.

But yes, it's gibber.

Britain's buy-to-let mortgage market has surged to levels not seen since the 2008 financial crash, prompting fears that a prolonged period of cheap money is setting off an unsustainable housing boom.

Lending to landlords topped £5bn in the past three months, a period that preceded the Bank of England's pledge this week to keep interest rates low for the next three years. More than one in 10 mortgages are now being handed to a would-be landlord while first-time buyers are still struggling to get on the housing ladder.

About 40,000 buy-to-let mortgages were advanced in the three months to June, up from 33,000 in the first quarter of the year, as landlords cashed in on cheap mortgage deals and investors sought higher returns than they could get from putting their cash in the bank.

Housebuilders are also reporting a rush to take advantage of government mortgage subsidies for new homes and a top London estate agent said the value of prestige homes in the capital had risen by 18% – adding £500,000 to the price of a central London home in the past year.

Mark Carney, the new Bank of England governor, admits that Threadneedle Street's commitment on borrowing costs is designed to reassure consumers and businesses that the cost of loans is not going up, which should encourage them to borrow, spend and invest.

Some 40,000 buy-to-let mortgages were advanced in the three months to June, up from 33,000 in the first quarter of the year, as landlords cashed in on cheap mortgage deals and investors sought out higher returns than they can get from putting their cash in the bank.