Surge In Fixed Rate Loans Expected
Following this week’s announcement from the Bank of England that inflation has risen to 3.7 per cent and that the base rate of interest for loans and savings could begin to rise from as early as June this year, many lenders are now expecting a rush of fixed rate loan applications from borrowers.
Many individuals currently have their home owner loan or mortgage on their lender’s standard variable rate, as this is often the cheapest option for their loan at the moment, but with talk of increasing interest rates, many will now be thinking about switching their current loan deal.
But borrowers have been urged to act quickly if they still want to be accepted for a cheap loan deal, as the majority of banks and building societies are likely to withdraw all their current fixed rate loan deals and replace them with more expensive ones, in anticipation of potential interest rate increases.
Several lenders, including the Skipton Building Society and Northern Rock, have already withdrawn their fixed rate loan products and replaced them with more expensive loan products and many more lenders are expected to do the same in the next few days.
However, many borrowers will be unable to obtain a new loan at a competitive rate, if at all, due to having a high loan to value on their existing home owner loan, or getting themselves a bad credit rating since they took out their original loan.
Melanie Bien of home owner loan brokers Private Finance said “Market leading fixed rates are already being snapped up by borrowers fearful of an imminent rate rise and today’s higher than expected inflation is only likely to increase demand. Those who would struggle to pay their mortgage if rates were to rise should consider a fixed rate sooner rather than later for peace of mind.”
