Race to lock in mortgaqe rates

Simon Foster at specialist IFAs FreelancerMoney writes "whilst many of our clients will prefer more flexible mortgages there are still those that want an absolute guarantee that their mortgage repayments will not alter over a set timeframe. We're encouraging anyone with a new purchase in the pipeline or who have an existing mortgage rate that's due to expire in the next 4 months to get in touch and secure their payments at the current lower levels".

With base rates widely expected to move to 5% at noon tomorrow many lenders have already withdrawn their lower priced schemes. The cost of finance on the money markets has pre-empted tomorrow's decision by the Bank of England Monetary Policy Committee and most lenders have had no choice but to raise their rates, however there are still a handful of mortgage companies who have yet to increase as they use up the last of their cheaper funding.

Simon adds "to compound matters many existing borrowers are soon to come out of very low rates that were fixed several years ago and so are facing considerably dearer costs. With with our unique contract-based mortgage underwriting we have the ability to secure a mortgage over the telephone within 20 minutes and so are experiencing an 11th hour rush of activity as clients fix at current rates".

The anticipated rate rise is in response to healthy economic indicators and an unexpectedly buoyant housing market. House price inflation is running at 8% pa with the average house now worth over £170000. The continued rise in property values has been fuelled by general optimism in the market against a backdrop of low unemployment and interest rates that, even after any rise tomorrow, will still be a historically very low levels. Continuing demand by buy to let investors is also fuelling price rises at the lower end of the market.

The outlook for rates next year suggests that the cost of borrowing could peak after a further modest rise and then potential fall back slightly in 2008.

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8th November 2006

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