Bad news on fixed rate mortgages

Recent predictions arising from the state of inflation in the UK along with the Bank of England's decision to keep interest rates on hold last month have spurred many homeowners and potential property purchasers to look at fixed rate mortgages.

The prediction from many industry experts and professionals was that the Bank of England would raise interest rates by at least 0.25% in May, taking them to 5.5% or more. Those wishing to escape the rising monthly repayment that would stem from another rise have been quick to look into taking out a fixed rate remortgage, and first time buyers have been looking even more closely at fixed rates as a result of the potential rise.

However, for many the news has been disappointing, as in view of the predictions many lenders have removed some of their best buy fixed rate mortgages from the market, which means that borrowers hoping to escape the financial pitfalls of another rise have hit a brick wall. With many lenders removing accessibility to their best buy fixed rate deals, consumers in the UK have been left with no other choice other than opting for a higher rate fixed rate deal on the off-chance that interest rates may rise again, or simply waiting it out and seeing whether the Bank of England decides to raise the rates – and if so, paying the cost.

However, although many lenders have removed their best buy fixed rates, including the Alliance and Leicester, the Portman Building Society, and a number of smaller lenders, experts are urging consumers to keep their eyes peeled, as there are still some good deals available out there for those that take the time to research and compare the mortgages on offer in the fixed rate sector.

One mortgage broker, Roy Hardy from Cobalt Capital, stated: 'We're going to see more and more lenders withdrawing their fixed rates and revising them upwards in the near future. But there are still a lot of fixed rates available to borrowers, although they may come with higher fees.

There's going to be a line where it's worth paying higher fees and getting a lower rate. Good independent advice is key as there is more to a mortgage than the headline rate.'

Tom Smith
24th April 2007

 

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