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Lenders Rush To Raise Fixed-rate Mortgages

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http://www.timesonline.co.uk/tol/money/pro...icle6485650.ece

A fresh wave of increases to mortgage interest rates by Britain's biggest mortgage lenders is set to hit hundreds of thousands of homeowners and buy-to-let landlords.

Cheltenham & Gloucester, the mortgage brand owned by Lloyds Banking Group, increased its residential and buy-to-let deals by up to 03 percentage points today. A three-year fix for borrowers with a 25 per cent deposit has risen to 5.59 per cent.

Northern Rock has also raised its five-year fixes and buy-to-let deals by up to 0.2 percentage points today. The Principality building society is also pushing up costs of its fixed rates mortgages while The Nottingham has withdrawing deals this weekend and is likely to raise mortgage rates next week.

On Wednesday, Times Online revealed that Nationwide Building Society, Britain's third biggest lender, was putting up rates by up to 0.86 percentage points today, the biggest hike in mortgage rates for months. A five-year fix has jumped from 4.78 per cent to 5.64 per cent. It blamed moves by rival lenders and a sharp rise in whole borrowing costs for the decision.

Ray Boulger, senior technical manager of John Charcol, the broker, said he expected the rest of the Lloyds Banking Group brands, including Halifax, Britain's biggest lender, to increase their fixed rates at the weekend, in some cases by quite large amounts, although no other changes have as yet been confirmed.

Homeowners are in a race to fix on to an attractive rate before mortgage costs rise over the coming months. Around seven out of ten new home loans are fixed-rate mortgages, according to the Council of Mortgage Lenders (CML).

Borrowers fear that interest rates have no where to go but upwards - from the current historically low level of 0.5 per cent - and are keen to lock into longer-term fixed rate deals now.

Economists agree that the Bank of England is likely to have to raise rates later this year or next year to control inflation, which could return when the economy recovers.

The expectation that rates will rise in the future is the main factor pushing up the cost to banks and building societies of wholesale borrowing on moneymarkets, which they use to fund new mortgage lending. Swap rates have climbed steeply in the last fortnight, which lenders say they are being passed onto homeowners in the form of more expensive home loans.

Rising Bond Yields Point The Way To Economic Recovery

Following on from this mornings thread we now have this.

Clearly the recovery is here, rates can only go up once we've had a recovery.

The recovery is clearly well under way as rates are going up.

Please buy property now before you lose out because rates have gone up.

The time is now.

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Following on from this mornings thread we now have this.

Clearly the recovery is here, rates can only go up once we've had a recovery.

The recovery is clearly well under way as rates are going up.

Please buy property now before you lose out because rates have gone up.

The time is now.

I hope you realise that thanks to your post there are now whole villages in Ethiopia where there's no sarcasm at all.

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I hope you realise that thanks to your post there are now whole villages in Ethiopia where there's no sarcasm at all.

I have enough sarcasm to share, no one need go without.

Although I am wondering if there is any link to interest rates going up and the news that are house prices recovering / stabilising.

Too much of a coincidence? Banks needing to ration as too many people want to borrow?

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I have enough sarcasm to share, no one need go without.

Although I am wondering if there is any link to interest rates going up and the news that are house prices recovering / stabilising.

Too much of a coincidence? Banks needing to ration as too many people want to borrow?

I don't think their cost of funds have risen I suspect you are correct and this all has to do with controlling their pipeline... I think I am right in saying at the height of the crash about £600bn of the mortgages available were funded by wholesale funding, without this money and the availability of operational centres long sonce closed the banks cannot possibly do anything other than seek to control lending volumes though pricing/tightening criteria....... In fact this may be one of the big things that effects the direction prices take.... it might for instance keep a lid rises.

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Perhaps banks are now sure that houses have a lot furher to fall and therefore are pricing in that risk to the more "riskier" types of borrower in recognition of that ...

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I don't think their cost of funds have risen I suspect you are correct and this all has to do with controlling their pipeline... I think I am right in saying at the height of the crash about £600bn of the mortgages available were funded by wholesale funding, without this money and the availability of operational centres long sonce closed the banks cannot possibly do anything other than seek to control lending volumes though pricing/tightening criteria....... In fact this may be one of the big things that effects the direction prices take.... it might for instance keep a lid rises.

Their cost of funds are zero they get it out of thin air, if not them then the wholesale markets. Put the higher mortgage payment on the credit card.

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Their cost of funds are zero they get it out of thin air,

No they don't, they get them from people like me.

And currently for fixed term deals I'm getting 3.5%. So it's difficult to see how they can lend at much less than 4.5.

tim

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No they don't, they get them from people like me.

And currently for fixed term deals I'm getting 3.5%. So it's difficult to see how they can lend at much less than 4.5.

tim

Inside the bank there is a big empty shelf where you think your money is.

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