Fixed-rate mortgages now pulled by lenders

19/04/2007

Due to the (BOE) Bank of England’s base rate fluctuating, lenders are starting to withdraw their fixed-rate deals.

On Wednesday Alliance & Leicester pulled their fixed-rate deals and the mainstream television organisation BBC told the other mortgage lenders to follow.

When the interest rate increases lenders normally withdraw their mortgage.

Lenders base their borrowing costs on money market rates; this is in conjunction with the Bank Of England’s base rate.

The UK inflation rate Wednesday period rose to 3.1%; this figure was more than the average.

Analysts feel that in May there is a chance of an increase on interest rates, simply due to growth into the money market rates, this in the end increasing them to a greater status.

It will be expensive for lenders and they will have to coordinate these to consumers.

Roy Hardy, a mortgage broker at Cobalt Capital, stated that, "Many lenders are currently offering rates below the money market rate and this cannot go on forever,"

He added, "have been pushed up because of speculation over BoE rates and this means it is more expensive for mortgage lenders to buy money on the market".

Next week Alliance & Leicester will introduce their fixed-rate mortgages, the deals will be competitive and they hope homebuyers take on this new mortgage deal.

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