Brits face new mortgage squeeze as rates rise

22/06/2009

Britain's homeowners could be facing a new mortgage squeeze, with new figures revealing a sudden jump in fixed rates.

Moneyfacts.co.uk, a financial analysis website, said that the typical five-year fix rose by 0.21 per cent between Monday and Friday last week.

Moreover, the number of fixes on the market was found to have sharply dropped, going from 937 to 887 over the week.

Movements on the financial markets, with an increase in the "swap rates" which help to determine mortgage costs, were blamed by the firm for the sudden change.

Rates had previously been falling, due to low lending rates from the Bank of England.

However, homeowners could now find it tougher to remortgage cheaply and might face a higher risk of repossession.

Michelle Slade, analyst at Moneyfacts.co.uk, commented: "After a period of relative calm in the mortgage market, lenders are stumbling over each other to increase fixed-rate mortgages.

"The recent increase can be attributed to the hike in swap rates that we saw a few weeks ago. Just like last time, lenders are quick to pass any increase in the cost of wholesale funding on, but are never quite as quick to reduce rates when the cost of funding declines."

Tags; Housing Debt and Bills, Young Family Finances,

• Share
• 
• 
• Store
• 
• Follow
•