Interest rate cuts could be put on hold

At the start of this year there were high hopes about base rate cuts amongst both borrowers and industry officials, with many expecting the base rate to fall significantly over the course of this year, and with some industry officials predicting that the base rate could fall as low as 4% or below by the end of the year. However, whilst the base rate was cut three times between December 2007 and April of this year, it seems that further rate cuts could be put on hold, as the Bank of England tries to deal with soaring inflation levels. Read more

Tags: recent additions, interest rates, present steps, Mervyn King, time, government’s 2% target

Tide turns on fixed rates, according to GMAC-RFC

Mortgage lender GMAC-RFC predicted a shift back towards customer preference for alternative mortgages such as tracker mortgage and discount deals in the coming year.

The provider claims that fixed-rate deals are “already priced high” in preparation for further interest rate increases, which might lead to customers to change to other options

Consumers are fearful of rising interest rates, meaning big rate hikes on variable mortgages.

Julie Gaskin, corporate relations manager at GMAC-RFC conceded that “in a rate-rising environment it often makes sense for borrowers to take out a fixed-rate deal”, but argued that “the tide is now turning, as [fixed-rate deals] are factoring in for one or more future rate rises, making tracker and discounted deals look increasingly attractive, and in many cases cheaper”.

“Now is the time for intermediaries to harness the change and look towards tracker and discounted products to drive business growth as demand for this type of product will inevitably increase in the foreseeable future. Those that shy away from this may be missing a trick with consumer hungry for a good deal”, she added.

Latest figures from the Council of Mortgage Lenders (CML) show around 75 per cent of new mortgage loans being fixed-rate deals.

Tags: tide, rate deals, demand, mortgage lender, good deal, rising interest rates, mortgage lenders, foreseeable future