Mortgage lender rate rises 'coming to an end'
3rd May 2012
The upwards rise in mortgage lender rates seen in recent months will gradually come to an end in the near future, it has been predicted.
Ray Boulger, senior technical manager at John Charcol, said there was "quite strong demand" in the first two months of the year, driven primarily by the ending of the first-time buyer stamp duty relief.
This not only meant that there was more demand from first-time buyers, but also that more chains could be put together, which created more demand across the market.
Another factor was when Santander changed its interest-only policy and also reduced the number of mortgages that it was offering and made the mortgages more expensive - which was primarily to reduce the volume of business that it was writing after a strong start to the year.
The result of this was an increase in the pressure being put on other lenders, who ended up getting more business than they had anticipated and could cope with.
"We have seen over the last two months or so, a series of lenders continuing to push rates up - typically only by ten or 20 basis points at a time, but it is a steady increase - and most lenders have increased their rates several times over the last few months simply to try to stem the flow of business," Mr Boulger explained.
He indicated that there are now signs that the country is coming towards the end of that phase, with the upward rate movement gradually petering out.
"We are now coming to the stage where we are seeing some lenders put rates up but some lenders cut them, whereas a few weeks ago nearly all the rate changes were upwards, so there are signs that this upward movement in fixed-rates is coming to an end," the expert said.
It comes after research from Which? magazine revealed that 70 per cent of mortgage-holders are concerned about an increase in interest rates, with 14 per cent saying they are already struggling with repayments.
Posted by Staff Writer: Robin Stenson
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