Those wanting a cheap fixed-rate mortgage deal should either go for it now or wait till sometime in the future when the rates become attractive again. The swap rates, the rates at which financial institutions lend to each other, are inching up. These heavily influence the interest rates of the lenders. Swap rates have been rising as hopes of the Bank of England slashing interest rates in the short to medium terms are reducing.
Recent economic releases and the documented minutes of the last two meetings of the Monetary Policy Committee of Bank of England, which sets the interest rates, have dampened the hopes of a cut-back in interest rates.
Fixed mortgages of Alliance & Leicester became more expensive last week. Abbey, Bristol & West, Accord and Portman are all following suit this week; and Halifax, one of the UK’s largest mortgage lenders, is also planning to hike its interest rates.
As Ray Boulger, senior technical manager at John Charcol, a mortgage broking company, puts it: "We have seen a number of lenders pull their fixed rates over the last week and this looks likely to continue.” However, he was optimistic about the base rate, and the amount of interest charged on fixed-rate mortgages, falling again.
Boulger, attributes it to oil prices stabilising, when he says: "It is also worth noting that the major recent worry for inflation [which the Bank of England attempts to control through interest rates] has been the strength of the oil price and, although prices of petrol at the pump are yet to see a marked reduction because of a shortage of refining capacity after the hurricanes, crude oil has fallen 15% from its high two months ago".
Posted
on : Wed, 26 Oct 2005 15:15 GMT | Mortgages News
By : Chris Rowe
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