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calling the bottom of the fixed-rate home loan market
ChuiMartinez
Posts: 376 Forumite
http://www.timesonline.co.uk/tol/money/property_and_mortgages/article5983385.ece
Mortgage brokers were last night calling the bottom of the fixed-rate home loan market.
They claim that the money markets are indicating that rates’ next move will be up. Market rates, which determine the cost of fixed-rate mortgage lending, increased from 2.96 per cent a fortnight ago to 3.15 per cent yesterday.
The best fixed-rate deal yesterday was with HSBC, which was offering a five-year fix with a rate of 3.99 per cent for borrowers with a 40 per cent deposit.
Hundreds of thousands of homeowners who have come to the end of fixed-rate mortgage deals over the past six months have chosen to sit and wait for fixes to fall before locking into a new deal.
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More than a million homeowners are currently on the standard variable rate.These homeowners have now been urged to lock into long-term fixed-rate home loans as fears grow that lenders will increase borrowing costs in response to rising gilt yields. Mortgage brokers warned that although mortgage rates will not rise rapidly, further decreases are now unlikely.
Figures showing a rise in inflation and the failed gilt auction on Wednesday have also shaken the market’s confidence in the Government, pushing up yields and, therefore, wholesale borrowing costs. Brokers forecast that lenders could pass this on to homeowners in the pricing of fixed-rate mortgages as early as next week.
High street lenders have continued to cut rates on fixed-rate deals in recent days.
Woolwich, the mortgage arm of Barclays, and Yorkshire Bank lowered rates yesterday, while Abbey, the UK’s second-biggest mortgage lender, and Alliance & Leicester have also recently passed on reductions.
Other leading lenders are likely to lower interest rates on certain deals next week but are not expected to compete with the current crop of market-leading deals.
Melanie Bien, of Savills Private Finance, the broker, said: “The cost of wholesale borrowing is expected to rise, which lenders will soon be forced to pass on to mortgage customers.
“We appear to be near the bottom of the market and homeowners looking for security would be wise to secure a longer-term fix as soon as possible, preferably for five years.”
Ray Boulger, the senior technical manager of John Charcol, another broker, said: “The rise in yields is bad news for homeowners hoping to fix. We are at the bottom of the market for fixed rates and lenders could respond to the events this week by pushing up the cost of fixes as early as next week.”
Woolwich has reduced its five-year fix for homeowners with at least a 30 per cent deposit from 5.29 per cent to 4.79 per cent, with a £995 fee. It has also lowered the cost of its four-year fix for borrowers with a 40 per cent deposit from 4.29 per cent to 3.99 per cent.
Yorkshire Bank reduced a number of mortgage deals yesterday by up to 0.6 percentage points, including a two-year fix for borrowers with a 20 per cent deposit which has been cut from 4.49 per cent to 3.99 per cent, with a £999 fee.
The average two-year fix has dropped from 6.28 per cent to 4.73 per cent in the past six months, according to Moneyfacts.co.uk, the financial website.
Ms Bien added: “Homeowners have been waiting for fixes to fall further but the competitive rates available now are unlikely to be beaten. A cheap five-year fix taken now would protect homeowners from rate increases in the long term.”
Mortgage brokers were last night calling the bottom of the fixed-rate home loan market.
They claim that the money markets are indicating that rates’ next move will be up. Market rates, which determine the cost of fixed-rate mortgage lending, increased from 2.96 per cent a fortnight ago to 3.15 per cent yesterday.
The best fixed-rate deal yesterday was with HSBC, which was offering a five-year fix with a rate of 3.99 per cent for borrowers with a 40 per cent deposit.
Hundreds of thousands of homeowners who have come to the end of fixed-rate mortgage deals over the past six months have chosen to sit and wait for fixes to fall before locking into a new deal.
Related Links
More than a million homeowners are currently on the standard variable rate.These homeowners have now been urged to lock into long-term fixed-rate home loans as fears grow that lenders will increase borrowing costs in response to rising gilt yields. Mortgage brokers warned that although mortgage rates will not rise rapidly, further decreases are now unlikely.
Figures showing a rise in inflation and the failed gilt auction on Wednesday have also shaken the market’s confidence in the Government, pushing up yields and, therefore, wholesale borrowing costs. Brokers forecast that lenders could pass this on to homeowners in the pricing of fixed-rate mortgages as early as next week.
High street lenders have continued to cut rates on fixed-rate deals in recent days.
Woolwich, the mortgage arm of Barclays, and Yorkshire Bank lowered rates yesterday, while Abbey, the UK’s second-biggest mortgage lender, and Alliance & Leicester have also recently passed on reductions.
Other leading lenders are likely to lower interest rates on certain deals next week but are not expected to compete with the current crop of market-leading deals.
Melanie Bien, of Savills Private Finance, the broker, said: “The cost of wholesale borrowing is expected to rise, which lenders will soon be forced to pass on to mortgage customers.
“We appear to be near the bottom of the market and homeowners looking for security would be wise to secure a longer-term fix as soon as possible, preferably for five years.”
Ray Boulger, the senior technical manager of John Charcol, another broker, said: “The rise in yields is bad news for homeowners hoping to fix. We are at the bottom of the market for fixed rates and lenders could respond to the events this week by pushing up the cost of fixes as early as next week.”
Woolwich has reduced its five-year fix for homeowners with at least a 30 per cent deposit from 5.29 per cent to 4.79 per cent, with a £995 fee. It has also lowered the cost of its four-year fix for borrowers with a 40 per cent deposit from 4.29 per cent to 3.99 per cent.
Yorkshire Bank reduced a number of mortgage deals yesterday by up to 0.6 percentage points, including a two-year fix for borrowers with a 20 per cent deposit which has been cut from 4.49 per cent to 3.99 per cent, with a £999 fee.
The average two-year fix has dropped from 6.28 per cent to 4.73 per cent in the past six months, according to Moneyfacts.co.uk, the financial website.
Ms Bien added: “Homeowners have been waiting for fixes to fall further but the competitive rates available now are unlikely to be beaten. A cheap five-year fix taken now would protect homeowners from rate increases in the long term.”
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Brave - of course it's in the interest of brokers to encourage people to take out mortgages now, through them of course
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