Following the well-publicised events of the last week, John Charcol is offering advice to customers looking to make the most of the 'credit crunch' situation.
As company representative Katie Tucker said: “You would have to have been living on the moon to have missed the fiasco outside the Northern Rock branches since the news emerged on Friday that it had applied for support from the Bank of England.”
Although the government has pledged to support the bank, John Charcol asserts that Northern Rock’s comparatively high pricing should be the impetus for homeowners to look for other options.
“Unlike the sub-prime market, where tightening of criteria is abundant, criteria changes are no more prolific than normal in the mainstream market,” said Ms Tucker.
She points out that mainstream lenders are continuing to reduce or withdraw discounts to compensate for the high 6.88% LIBOR rate. However, as a result of the credit crunch, Ms Tucker sees further interest rate hikes as unlikely.
She said: “borrowers who snap up a good discount or tracker now may reap all the rewards if bank rate drops even sooner than expected.”
“Discounts from bank rate additionally avoid any risk that lenders will increase their SVRs,” added Ms Tucker.
It is probable that fixed rates will now become more competitive as swap rates have fallen 0.15%. According to John Charcol, this particularly applies to five-year fixes which have dropped 0.17% in the two-week period.
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