Homeowner Loan Rates Increase
We reported recently that it looked increasingly likely that the majority of lenders would be forced to increase the rates on their loan products, particularly on fixed rate homeowner loans.
This is largely due to an increase in the cost for banks and building societies wanting to borrow funds at commercial rates on the wholesale money markets. A number of banks and building societies have now increased their fixed rate loan products this week and several more are expected to follow their lead today (17th June).
Although the current increases are being blamed on an increase in the cost of wholesale loans to lenders, it is also quite likely that several banks and building societies are considering the high probability that the Bank of England base rate of interest is likely to increase in the not too distant future and many of them will be wanting to cover themselves against these potential rises on any new loans they are currently offering to borrowers, particularly on any longer term fixed rate loan products.
Head of mortgages at Moneysupermarket.com, Louise Cuming, commented on the current rate increases, she said “There has been a flurry of activity in the mortgage market, but unfortunately to the detriment of borrowers. Halifax raised its fixed rates yesterday, Nationwide and Chelsea Building Society have already increased many rates, the Principality Building Society increased its 10 year product form 5.19% to 5.39% and Cheltenham & Gloucester and Abbey are both raising some mortgage rates today.
However, there are still some “killer” deals about, borrowers with a large deposit who can act quickly can still lock in both fixed and tracker products at around 3 per cent. The watchword here is speed, as the best deals will disappear quickly.”
