Following the Bank of England's decision to hold interest rates steady at 0.5 per cent, Brits on standard variable rate mortgage deals are being urged to watch out for rate increases.
The base rate has now remained static for two months, indicating that the Monetary Policy Committee (MPC) has taken the rate as low as they can. Commenting, Ray Boulger of mortgage broker John Charcol said:
"It is likely that when the MPC starts increasing Bank Rate it will move up quite quickly, which could be very uncomfortable for anyone still locked into a variable rate mortgage
at that time, especially borrowers whose mortgage payment comfort zone has migrated to their current low payments."
Commenting on mortgage
holders' options, Mr Boulger added: "Switching to a fixed rate
for at least five years will be the best way for most people to buy protection from increased rates, but the timing of when they should switch will depend on individual circumstances."
Mr Boulger also noted that in the last few weeks, lenders have been increasing the availability of mortgages with up to 80 and 85 per cent loan to values (LTV).
Other positive notes for the housing market include the recent revelation by the Royal Institution of Chartered Surveyors (RICS) that properties are selling faster, and the latest Consumer Confidence Index from Nationwide showing its largest rise in two years, prompting Mr Boulger to predict stability in the market:
"These are all indications that conditions in the housing market are now improving and I expect the market to stabilise by the third quarter of this year and house prices to show a net fall of only five per cent in 2009," he said.
Nevertheless, rather than expecting a rapid increase in house prices, Mr Boulger predicts that, "the prospect of increases in interest rates, plus lenders' less generous affordability calculations, will inhibit house prices increasing too quickly."
© Fair Investment