The poor economic outlook saw mortgage rates take a tumble over late spring and summer, as the prospect of the base rate rising got pushed further back. However, fresh fears over banks' liquidity in the face of the eurozone crisis have bumped up money market funding costs and fed through to a slight rise in rates. That comes despite the arrival of rate rises still remaining a long way away, according to the markets.
Mortgage optimism for 2012
Independent mortgage experts John Charcol are optimistic about the future of mortgage lending. Whilst many leading experts report gloom and doom over the market, John Charcol suggests that there are an increasing number of lenders who have returned to 90% loan to value.
Simon Collins Product, Technical Manager at John Charcol said, “Despite the approaching festive season, we have seen the number of good quality purchase enquiries hold up very well, so whilst the market’s not great, it’s not as bad as it’s being painted.”
Looking ahead, term tracker mortgages could be popular as people are looking for a long-term solution instead of remortgaging every 2 years.
“Term trackers, in light of predictions for the bank rate increase being put back to the early part of 2014, and continuing concerns over the availability of future credit, are particularly popular,” Mr Collins continued.
Mortgage pessimism for 2012
The Financial Services Authority (FSA) mortgage lending data suggests that the future is not that bright however. FSA research found that the proportion of new lending done at an LTV of 90% has remained at 2%, as it has been all year.
Lenders have made it much tougher to take out cheap interest only loans and to make matters worse they still have a light grip on their finances. The Eurozone debt crisis is having a significant impact on the banking industry, which will only put more pressure on financial products which are readily available to the consumer.
Mortgage payments
The Council of Mortgage Lenders has found that persistently low interest rates have helped reduced mortgage interest payments. This means that monthly mortgage interest payments are the most affordable for 8 years!
With experts predicting that interest rates will not rise until at least 2013, 2012 looks set to continue offering homeowners low interest rate repayments on their mortgages.
To buy or not to buy?
There is a growing interest from buyers as the demand for affordable housing has increased. The end of the governments stamp duty freeze in March may prompt buyers to snap up properties before the stamp duty holiday expires on 24 th March. Despite this moving the cost of moving is horribly expensive with sky high deposits and house prices, although falling are still relatively expensive. (source ; http://www.moneyexpert.com )
Interest rates will surge to 6.5% by 2015, Barclays says
Interest rates will soar over the next five years despite feeble economic growth and rising unemployment, leading economists warned today. A report by Barclays said rates will rise to 3.5% by the time of the London Olympics in 2012 and to 6.5% in 2015 to keep inflation under control. Read More
What will happen to interest rates in 2012
The Bank of England Base Rate has held at 0.5pc for the last 34 months. While it is good news for borrowers who are sitting pretty on cheap mortgage deal, the record low rate comes at a price for savers who have seen their returns plummet. The gap between inflation and Base rate is much higher than usual, which means savers struggle as the value of their deposits do not keep up with rising prices. Read More
30 Year Mortgage Interest Rate Forecast
All forecasts are provided AS IS, and FFC disclaims any and all warranties, whether express or implied, including (without limitation) any implied warranties of merchantability or fitness for a particular purpose. Read More
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