Halifax has increased the cost of more than a third of its fixed rate mortgages for new customers this week, suggesting that the falling rates of previous months might be over.Tracker mortgage
customers have been reaping the rewards of five consecutive cuts in the Bank of England base rate, but consumer groups are now warning homeowners to seek out a competitive fixed rate mortgages
to protect themselves from any further rate rises.
If mortgage lenders
are going to cut their fixed rates then they will have already done so, so the time to fix is now, Melanie Bein, director at mortgage broker Savills Private Finance, told the Times Online.
As the cost of wholesale mortgage
funding falls to its lowest level in decades, the average two year fixed rate mortgage
has fallen from 7.08 per cent in July 2008 to 4.95 per cent in January 2009, according to market analysis from Moneyfacts.co.uk, but "Fixed-rates are unlikely to drop any further and could even start to increase." Ms Bein added. Halifax
said that its decision to hike its rates was based on an increase in swap rates, but mortgage brokers say that the lender was too hasty to make its mortgages more expensive. Swap rates rose slightly this week, to 2.2 per cent from 2.08 per cent at the end of last month, but have already fallen back down to 2.01 per cent.
An estimated two million homeowners will be coming to the end of their fixed rate mortgage deals in the next 12 months, and will then have to answer the question of whether to fix or not, and if they do decide to fix, they face the challenge of finding an affordable deal.
Despite calls from the Government for banks to increase the amount they lend, the best mortgage deals are still restricted to borrowers who only need to borrow 60 per cent LTV (loan to value), leaving first time buyer mortgage
customers out in the cold.
In light of the Bank of England cutting the base rate to one per cent this month, Halifax has announced that it will be cutting the cost of its standard variable rate and tracker mortgages.
Its tracker rate will reflect the whole base rate cut, falling 0.5 per cent to just one per cent, while its SVR will fall to four per cent, both effective from March 1.
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