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On A Cusp: Lenders Look To Rate Rises

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On a cusp: lenders look to rate rises

By Esther Shaw

(Taken from: Independent Online - 30 April 2006)

To fix or not to fix, that is the question - and a tough one for home loan borrowers to answer, now that the base rate has remained on hold at 4.5 per cent for the past eight months.

But one thing is sure for those looking for peace of mind in their monthly budgeting - the cost of fixing your mortgage is going up.

Portman building society is the latest lender to withdraw its two-year table-topping fixed rate deal at 4.3 per cent. It has replaced this with a deal at 4.49 per cent.

Halifax has also recently nudged its two-year remortgage fix up from 4.49 per cent to 4.56 per cent, while Chelsea building society has increased its two-year rate by 0.2 per cent to 4.69 per cent.

"Northern Rock has also warned that its fixed-rate products are on official 'withdrawal watch' before a possible repricing upwards," says Nick Gardner from Chase de Vere Mortgage Management, a broker. "This means they could disappear any day."

Rates are beginning to edge up, after a rise in "swap rates" - the cost to lenders of borrowing from one another, and the factor that determines the price of fixed-rate deals for customers.

"Swap rates have been rising relentlessly during the last few weeks," says Matthew Wyles, a Portman spokesman. "Clearly the markets think the next base rate move will be up."

Mark Harris from broker Savills Private Finance, says that with swap rates at their highest level in 12 months, lenders have been raising their fixed-rate deals accordingly. "Those who have not already done so are expected to follow suit in the next few days."

He urges people who are looking to buy or remortgage in the short term - and who need the certainty of set monthly repayments to help with budgeting - to move quickly to choose a fixed-rate deal.

This is a view shared by David Hollingworth from London & Country, a broker, although he says there are still some good fixes to be had.

He picks out a two-year fix from Britannia building society at 4.34 per cent, and a five-year deal from Newcastle building society at 4.62 per cent.

Brokers agree, however, that if you can deal with fluctuating mortgage costs - and still afford to make your repayments if interest rates rise - you would now be better off looking at a tracker or discounted deal.

Bristol and West and Portman both have discounted deals at 4.19 per cent. Elsewhere, the Bank of Scotland has a tracker at 0.25 per cent below base rate for two years - giving a payable rate of 4.25 per cent.

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"Swap rates have been rising relentlessly during the last few weeks," says Matthew Wyles, a Portman spokesman. "Clearly the markets think the next base rate move will be up."

Duck and cover.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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