The mortgage market has seen rates falling in recent months but that may be coming to an abrupt halt. Fixed rate pricing depends on what the market anticipates may happen to interest rates and uncertainty over the forthcoming budget, mixed messages from the Bank of England and global unrest is pushing costs back up for lenders.
Swap rates are a good indicator of the direction of fixed rate pricing and they have bounced back up. If that persists, fixed rate improvements will be brought to an abrupt halt and edge back up.
Coventry BS has announced hikes from Friday and Co-operative Bank will withdraw some of its lowest rates Thursday night. Other specialist lenders have also started to adjust rates upwards in recent days.
Borrowers may have been lulled into a false sense of security with round after round of rate improvements but this is a reminder that things can change.
This isn’t a cause for panic, but those that have been tempted to wait for lower rates may want to consider locking into a deal in case we see further increases. If expectation eases again it’s still possible to review rates.
David Hollingworth is associate director at L&C Mortgages
