LONDON - Homebuyers in the UK have been urged not to hope for lower fixed-rate deals, as the surging inflation would not allow such a scenario. This news has now come as a surprise since lenders were falling over themselves to offer good rates just a fortnight ago.
But the revelation by the Bank of England that inflation is at the highest rate in 10 years have made these lenders rethink their policy and consequently, they have pulled back their best bets form the market. Melanie Bien, associate director with Savills Private Finance commented that the rate at which banks lend money to each other had jumped in recent weeks. These swap rates are an indicator of the market confidence, "Lenders are starting to pull their fixed rates and replace them with higher priced deals. This isn't good news for those who need the certainty of set monthly mortgage repayments, so if you are in that position you would be wise to fix sooner rather than later," she warned.
Portman Building Society has already upped the rates on its five-year package from 4.45 percent to 4.59 percent. Newcastle Building Society forfeited its top spot as the best-buy firm and withdrew its rate of 4.22 percent on the two-year deal. Abbey quickly followed suit and jacked up its two-year rate to 4.59 percent from 4.49 percent. In the backdrop of these movements in the market, Simon Jones, director at Savills Private Finance, the mortgage broker, said, “If you want a cheap two-year fix, buy it now. If you wait a few weeks, it could be more expensive. A month ago, everyone was clamoring for a base rate cut and swap rates ran ahead but went a bit too low."
The Bank of England’s Inflation Report has categorically stated that there will be no further rate cuts in the near future. Simon Tyler, of Chase De Vere Mortgage Management has taken this as a cue and is asking customers to buy those homes before it is too late, "The excellent-value, fixed-rate deals on the market at the moment should be grabbed with both hands because it’s quite possible that this is as low as they are going to get," he said.
Posted
on : Sun, 21 Aug 2005 15:25 GMT | Mortgages News
By : Pippa Fielding
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