23 June 2009

Fixed rates at the beginning of a steep hill?

19/6/09 - The Council of Mortgage Lenders has reported that 69% of borrowers took out a fixed rate mortgage in April, with an average rate of 4.83%. The percentage of borrowers fixing is the highest since June 2008.
While the number and value of house purchase loans increased by 16% from March to 35,600 loans worth £4.5bn in April, this was still well down on the year before.
SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) rose steeply last week. As a result, Accord, C&G, Nottingham, Northern Rock, Yorkshire, West Bromwich, Chelsea building society, Birmingham Midshires, Bank of Scotland and the Nationwide have all increased rates on longer term fixed rate deals.
Although the above emits some large high street names, such as Abbey, A&L, Woolwich, etc, those who have not increased their rates (at the time of writing) will receive a deluge of new business and thus, in order to stem the flow of business and maintain service standards (so they will say!), will no doubt increase rates anyway. What's there today may not be tomorrow.
The Confederation of British Industry expects quantitative easing to continue for “some months”, with the Bank of England maintaining interest rates at 0.5% until perhaps the spring of next year. But although the base rate looks to stay static for some time, both banks and building societies are showing signs of raising tracker rates also.
With house prices so low and experts predicting the harshest period of the recession is behind us, it’s now down to the consumers and house buyers to lead the way. As I stated at the beginning, purchasers are showing signs they think the worst is over.
To take advantage of the current relatively low long term fixed rates, DON'T DELAY and visit your local mortgage broker (AToM!)asap..

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