Mortgage News Homeowners Ditch Moving For Improving As Mortgage Rates Rise 1814

Homeowners ditch moving for improving as mortgage rates rise

26 June 2008 / by Joy Tibbs
Another blow has been dealt to the mortgage market as three major home loan lenders – Bradford & Bingley, First Direct and the Co-operative Bank – decide to raise fixed-rate mortgage prices.

Bradford & Bingley’s fixed-rate mortgage deals will now be between 0.5 per cent and 0.7 per cent higher, while First Direct has increased rates on its two-year fixed-rate loan by 0.16 per cent to 6.15 per cent.

Meanwhile, the Co-operative has added an extra 0.7 per cent to its three-year fixes and 0.9 per cent to its five-year fixed-rate deals.

However, it is offering customers a new fee-free three-year tracker, which will only be available to its current account customers. The rate is 5.99 per cent for mortgages with up to 75 per cent loan-to-value (LTV) ratio and 6.24 per cent for loans with up to 90 per cent LTV.

Commenting on the new deal, head of mortgages at, Louise Cuming, said: “Tying customers into a current account with the lure of an attractive mortgage product range is a clever move by the Co-operative Bank. By targeting its current account customers, the Co-op can cherry pick the most financially sound applicants, so its market leading rate will only be available to market leading applicants.”

With fewer mortgage deals available, and rates constantly rising, it is unsurprising that people are choosing to renovate their homes rather than moving home.

GE Money found that carrying out home improvements can add significant value to property, with the top three options – adding extra space, loft conversions and cosmetic changes such as new flooring or decorating – could raise the value by £54,922.

Head of mortgage marketing, GE Money Home Lending, Gerry Bell, said: “The current housing market means that more people are looking to improve their home rather than move.

“However, before embarking on any improvements, it pays to know which ones will add the most value to your property. Region, type of property and location are all factors which will determine which improvement is best for a particular property, with the creation of extra living space continuing to be the best value improvement.”

Despite this, according to the Alliance & Leicester home index, 3.25 million homeowners are looking to move house in the next year. It claims that more than a third have made improvements to their homes to increase the value, while one in five plan to make changes in the next year.

Head of mortgage products at Alliance & Leicester, Richard Taylor, said: “Even within the current climate, there are still millions of people who are looking to move and they are doing all they can to get the best price for their property.”

© Fair Investment Company Ltd

Written by Editorial Team