Borrowers need to act fast!
Those borrowers who are still considering fixing their mortgage should act fast as many of the leading mortgage providers pull their best rates prior to an expected rate rise in November.
Several leading lenders pulled their cheap fixes last week, in anticipation of a November rate rise, and more deals are expected to go. Halifax stopped offering its market-leading two-year rate of 4.39% on Tuesday, while Alliance & Leicester (A&L), Cheltenham & Gloucester and Scottish Widows have also withdrawn their cheapest deals. Abbey is replacing its fixed-rates tomorrow and Northern Rock is putting its fixes up at the end of the week.
All 46 economists polled by Reuters, the data firm, this month expected the Bank of England’s monetary policy committee to put up Bank rate, formerly base rate, from 4.75% to 5% when it meets in 10 days. One in four think we will see another quarter-point increase in the first three months of 2007 due to a buoyant housing market and resurgent inflation.
Interest rates in the money markets, where lenders buy funds to pass to borrowers, are at their highest level for two years as the odds on a November rate rise shorten. Many lenders are therefore increasing their fixed rates because it is costing them more to provide such deals. There are still some two-year rates below 4.5% on the market.
The downside with any special mortgage such as a fixed rate is that normally there are considerable charges attached to taking out such a loan as well as penalties if you want to come out of them earlier. Therefore, you should be sure that you are certain that you circumstances mean that you can plan that far ahead and are happy to retain your investment property for at least the length of any mortgage term.
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