active mortgage advice

long term fixed rates…

dcwebb — Wed, 25 Mar 2009 18:43:47 +0000

The Bank of England’s program of ‘quantitative easing’ and in particular, the buying of longer dated government bonds, should have the effect of lowering the cost at which lenders are able to provide longer term fixed rates. If you’d like advice on the latest mortgage deals available, please don’t hesitate to call us on 0800 808 7007.

mortgage rates coming down…

dcwebb — Wed, 25 Mar 2009 18:40:30 +0000

Now that Bank of England Base Rate is just 0.5%, we are seeing mortgage rates coming down to much more competitive levels. Whilst mortgages are a considerable margin above Bank of England Base Rate, this should be seen in the context that the Bank of England would not have reduced rates so much if mortgage lenders were passing on all the rate cuts. The abililty for lenders to make a significant lending margin should in fact help the banks to rebuild the strength in less time, to the benefit of the whole economy.

…unintended consequences

admin — Tue, 29 Apr 2008 08:27:03 +0000

Whilst many market commentators welcomed the Bank of England’s £50billion injection of liquidity in the banking system we have not seen any positive effects in the mortgage market.

In fact, since the announcement the money markets are pricing in less aggressive future interest rate cuts from the Bank of England. This has resulted in an increase in the cost to banks when creating fixed rate mortgage products, and thus an increase in the fixed rate mortgage products available to consumers.

The Bank of England need to reassure the markets that they will continue to cut interest rates. Hopefully we will hear some reassuring words from the Monetary Policy Committee’s arch dove, David Blanchflower, during his speech today for the David Hume Institute at The Royal Society of Edinburgh.

…rate decision split

admin — Thu, 24 Apr 2008 10:51:44 +0000

The published minutes of the Monetary Policy Committee reveal that it’s members were split overthe decision to cut interest rates.

Two members wanted to leave the rate at 5.25%, whilst one member vited for a 0.5% cut. Six of the nine members agreed that a 0.25% cut to 5% was the best course of action.

We expect to see further monetary easing, with the next 0.25% possibly coming in June or even May.

…liquidity scheme

admin — Wed, 23 Apr 2008 11:37:32 +0000

On Monday 21st April 2008 the Bank of England made the unprecedented move of introducing an asset swap facility for banks to swap their mortgage backed securities for treasury bills in an attempt to improve liquidity and confidence in the financial markets.

Only AAA rated mortgage securities that were on the banks balance sheets at the end of 2007 will be accepted as the Bank of England was keen not to been seen stimulating new lending. Unfortunately, stimulating new lending is exactly what needs to happen as the falling level of competition in the mortgage market is what is causing the increase in the cost of new mortgages and remortgages. Furthermore, by accepting existing mortgage books, we feel that the Bank of England is less able to control the quality of the securities the banks deposit.

Ideally, we would like to see the Bank of England and the FSA work with the mortgage industry to come up with standard risk categories for mortgages that fit within the Basel II framework, in order to restore confidence and investor appetite to the mortgage backed securities market. This would also provide the Bank of England with a more sophisiticated set of tools for providing liquidity support to the industry as they would be able to stimulate lending in different sectors of the market, such as first time buyers.

…interest rate cut to 5%

admin — Wed, 16 Apr 2008 09:29:40 +0000

The Bank of England has cut the base rate 0.25% to 5% on Thursday 10th April 2008.

The cut was widely expected with most commentators being disappointed not to see a more aggressive 0.5% cut.

Even though many lenders are expected to cut their standard variable rate there is still insufficient competition in the mortgage market to force lenders to offer more competitive products.

…5.29% 10yr fixed rate

admin — Thu, 27 Mar 2008 09:54:13 +0000

Whilst short term mortgage deals are getting increasingly expensive as the financial liquidity crisis rumbles on, a suprising winner is the long-term fixed rate. Borrowers looking for a mortgage of 60% loan-to-value or less can now apply for a 10 year fixed rate mortgage at 5.29% with £995 arrangement fee (free valuation & free legal’s on remortgages).

In previous years the lowest the 10 year fixed rate mortgages came down too was 4.67% and they have been over 6% within the last 12 months. Furthermore, it’s commonly regarded that the neutral interest rate in our economy (that neither stimulates nor cools activity) is between 5% and 5.5%. So fixing for the long term at 5.29% looks like a very fair proposition.

…MPC voted 7 to 2

admin — Wed, 19 Mar 2008 16:22:51 +0000

The Bank of England’s Monetary Policy Committee voted by seven to two to hold interest rates at 5.25% this month.

When balancing the slowdown in growth against above target inflation, the MPC felt “the risks on both sides had increased over the past month” and had not changed sufficiently to merit a rate cut.

The minutes also revealed that cutting rates for the second month in a row “might lead observers to think that the Committee was focusing on downside risks to demand at the expense of the medium-term outlook for inflation”, potentially leading to an exaggerated market reaction.

Sir John Gieve, the deputy governor responsible for financial stability, and David Blanchflower felt “the downside risks argued against delay”.

The quarter point rate cut that’s widely expected in May could now be brought forward to April.

…interest rate held at 5.25%

admin — Thu, 06 Mar 2008 14:21:44 +0000

As expected, the Bank of England’s Monetary Polict Committee decided to leave interest rates unchanged today at 5.25%.

This comes as lenders continue to increase their mortgage rates and tighten lending criteria in response to current market conditions. The number of lenders and the number of mortgage products available has been shrinking and this reduction in competion has fed through to an increase in rates and fees.

…MPC voted 8 to 1

admin — Thu, 21 Feb 2008 10:25:44 +0000

The Bank of England’s Monetary Policy Committee voted by eight to one to cut interest rates by 0.25% to 5.25% this month.

The published minutes of the MPC meeting revealed that David Blanchflower voted differently to all other members, favouring a larger cut in rates to 5%.

When discussing the possibility of a housing market slowdown, they said mortgage approvals had reached the lowest number since 1995.

However, the minutes state: “There was little evidence to suggest that a slowing housing market would lead to widespread financial distress and defaults in the United Kingdom unless there was also a significant rise in unemployment or mortgage rates.”

Members also said that uncertainty about the future path of interest rates had risen internationally.

The MPC discussed the potential for greater tightening in credit, due to continued stress in global financial markets. They also highlighted lower UK consumption growth and slowing retail sales.