Mortgages Uncovered

As inflation soars fears are that the Bank of England will raise interest rates over forthcoming months leading to a sudden rise in 2-year swap rates from the interbank rates. Jumping from 5.8% to 6.29% over previous weeks, swap rates are now soaring.

Savills Private Finance spokesperson, Melanie Bien, says:

“Borrowers should act quickly to take advantage of current deals because the evidence suggests that rates will keep rising. Some lenders have already re-priced loans and others are likely to follow.”

It is now new homebuyers with a minimum of 40% deposit who are the only ones who can expect the best deals from the UK’s largest lender, Halifax following its revised rate announcements. To put this into perspective, average house prices in England/ Wales stand at £218,875, therefore mortgage borrowers asking for loans from Halifax will require £87,550 either as a deposit or in equity in order to acquire a rate of less than 6%.

The Abbey has also stated it will not let new mortgage customers asking for a 95% loan to add their application fees to the mortgage cost and they will be required to pay a £2,499 charge upfront.
Head of Mortgages at Moneysupermarket.com, Louise Cuming, has been quoted as saying:

“Abbey is clearly nervous about allowing borrowers to exceed the 95 per cent limit in the current climate. I fear that this will be a growing trend, leaving applicants not only needing a 5 per cent deposit, but also significant savings to cover fees, stamp duty and solicitors’ costs.”

MoneyExpert.com statistics show that average application fees have risen from the original £517.19 in September 2006 to £860.25 in May 2008. On the market now there are at least 323 more deals with fees equating to more than £750 than there were in Set 06.