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Mortgage rates still rising

[ Posted April 7th, 2012 ]

As most banks continue to face the harsh lending conditions of the current lending environment, due to a combination of factors including the continual eurozone debt crisis, mortgage rates are continuing to increase.

Most banks are aiming to lower the amount that they make available for lending this year which is hurting those that want a to purchase a new home and turning the UK into more of a renter’s market than a buyer’s market with most analysts predicting that the buy to let market will make up the majority of lending this year.

This week Co-op joined the group of lenders that have had to announce higher SVRs, increasing their average term by about 0.5% up to the standard rate of 4.74% as of May 1st. Over the month of March Bank of Ireland, Halifax, Yorkshire, and Clydesdale Banks have all also announced new mortgage rates, making it harder for the average home owner to find a lower deal on their SVR at any large high street lender.

Chelsea Building Society also announced an increase of 20 base points to all of their fixed mortgages deals and Nationwide Building Society raised the cost of both tracker and fixed mortgage deals. John Charcol mortgage broker Ray Boulger stated that there has been a steady trend of major and smaller lenders increasing their mortgage rates over the last month or so,  with many doing so because they want to lend less.

He explained that most lenders are saying that the wholesale funds increasing rates are the reason why they are being forced to increase SVRs, but over the last few weeks this is not so much the case as they have stayed steady. Therefore, the reason for the increase is simply to decrease the amount of lending they conduct with consumers.

Largemortgageloans.com broker Nigel Bedford said the same as he pointed out that the interbank lending rate and the two year rate swaps that are used to create a mortgage package have actually decreased slightly therefore it cannot be blamed on the high cost of lending funds. Despite this fact, most brokers are expecting that mortgage rates will continue to increase over the next few months making it vital that those who want a good deal get in on the market now.

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