2
Feb
Mortgage rates 'to be volatile'.....
Brokers are telling new borrowers to expect mortgage rates to
fluctuate in the coming months, owing to economic
uncertainty.
A number of major lenders have increased the cost of a mortgage for
new borrowers in recent days.
Brokers suggest that the increased activity is likely to be
followed by an "ebb and flow" in the mortgage market in the first
half of 2012.
Lenders are concerned about the cost of funds to lend in the
current climate.
Uncertainty in the eurozone means that they do not want to
overstretch themselves with lending, when there is a chance that
accessing funds could become more expensive.
'Shop around'
In recent days, some of the major lenders have increased their
mortgage rates by up to 0.3 percentage points.
Others have changed the loan-to-value bands, so borrowers might not
always get a cheaper deal by offering a larger deposit.
"It really does pay to shop around at the moment if you are looking
for a mortgage as some lenders are much more expensive than
others," said Aaron Strutt, of Trinity Financial.
Lenders tend to move as a herd, as they do not wish to be inundated
with mortgage applications if they suddenly become cheaper than
their rivals.
Andrew Montlake, of mortgage broker Coreco, said: "We are going to
see a period in which the Bank rate remains stable, so lenders will
manage the business they want by increasing or decreasing their
rates."
A few lenders have reduced mortgage rates for new borrowers in
recent days.
He predicted that this volatility would continue for the first half
of the year at least, until there was a clearer picture in the
eurozone crisis.
Long-term costs for lenders have risen, he said, owing to
uncertainty as a result of the crisis.