Osborne’s Budget Suggests Rise in Interest Rates
Despite increasing numbers of mortgage lenders lowering their rates and loosening the requirements for their products, many are concerned that rates could go up following last week’s Budget announcements.
Those that have relaxed their mortgage terms include the Norwich and Peterborough Building Society, which now lends up to 85 per cent of the value of a property as opposed to 80 per cent. It has also lowered its rate on a five-year fixed term product. The Co-operative's Brittania also lowered rates at 90 per cent loan-to-value.
Barclays has also introduced more preferential rates for those borrowers with a 15 to 20 per cent deposit, and variable rate products from Cumberland Building Society have also been improved.
David Hollingworth, mortgage expert at London & Country Mortgages in Bath, Somerset told the This Is Money website: "There has been a lot of encouraging activity in the mortgage market in recent days."
He added: "Rates have been low for some time now for borrowers with a large cash deposit or equity in their home, but it is heartening to see improvements at the higher loan-to-value end. Many lenders are more comfortable in their lending and as their appetite to pull in more business grows, we are seeing sharper rates."
However, for those who are not tied-in to a fixed rate mortgage deal, and who have grown used to the low interest rates on variable mortgages, there could be trouble looming. When the VAT increase comes into play in January, inflation may rise as a result.
This would mean that interest rates would have to rise in order to counter this, and would have a significant effect on variable mortgage rates.
UK Property news posted by Garry on 28 June 2010
