by Mark Johnston
Everyone seems to be asking the same question “are interest rates going to rise”. Every other day mortgage news seems to be flooded with a different opinion on what’s going to happy to this doesn’t help those looking to remortgage and not knowing which way to go in such an uncertain world.
Will mortgage rates rise or fall, what’s going to happen with the interest rate, what’s the state of the UK economy and should borrower fixed their mortgage rate now or hold off on a variable or tracker mortgage. Mortgagerates.org.uk look at the latest reports, announcements, predictions and tips that may help to make the all import decision.
One of the main concerns for UK lenders is the publication of the new mortgage rules by the FSA before it hands powers for regulation of the UK financial industry over to the Bank of England. The new rules are set to shake up thr industry following the financial crisis and subsequent credit crunch. Lenders are worried at how the FSA will balance keeping the credit flowing in the market whilst tightening up on rules to avoid the same problem that brought the industry closer to collapse a few years ago.
One of the major changes will be how banks and building societies screen customers for interest only mortgages as many current borrowers have no way of paying back the original loan even though the majority keep to date with monthly payments. The FSA will be forcing lenders to have much more stringent rules in place and want lenders to make sure their borrowers have evidence of how they can pay interest only mortgages back other than simply having relying on their house rising in value.
For those that are looking for a repayment mortgage (interest and capital) the market is pretty good with new and better deals being published everyday and many lenders starting to reduce their rates and fees in order to attract new customers. Recently mortgagerates.org.uk have seen banks and building societies reduce their fixed rate mortgages whilst variable and tracker mortgages remain very low due to the sustained low interest rates.
Yorkshire building society launched a new fixed rate deal at 3.99% for 5 years for those who have a 25% deposit as the mortgage has a loan to value (LTV) of 75%. A £200,000 loan would require a £50,000 deposit or the equivalent in equity if you were remortgaging.
First Direct, the telephone banking arm of HSBC have just slashed their fees down to £99 which is causing a stir with record numbers of enquired the Bank has had to call in staff from its sister company to help deal with the demand and clear some of the backlog.
Two year trackers are probably still the cheapest deals which are currently being sold for around 2.5-3% although mortgagerates.org.uk have reported on some cheaper deals from the likes of HSBC. Although these are the best options in terms of prices, its worth considering longer term changes to interest rates as this would effect monthly repayments so factor in some increases into any thoughts on affordability before taking out one of these loans.
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