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Aug 14, 2006
Following the
increase in the Bank of England’s base rate by a quarter point to 4.75, majority
of the home loan borrowers in the UK have started opting for fixed
rate loan options. However, several mortgage brokers have issued warnings
against this reaction among borrowers.
James Cotton, a
mortgage specialist at independent broker London & County Mortgages, warned
borrowers not to panic or to immediately lock into a fixed rate deal. Cotton
says that if borrowers wanted the security of being able to budget each month
and know exactly what they would pay for the next few years, then a fixed rate
deal made sense. However, borrowers should expect to pay a premium for this as
fixed rate deals are going to be much more expensive than other products.
Ray Bouglar, a spokesperson
for independent mortgage broker Charcol, also warned that jumping into fixed
rate deal was not wholly advisable. He also advised the adamant borrowers who
wanted to lock into fixed rate deals to move on quickly as lenders would put up
their rates over the next few weeks.
The base rate hike
was expected to affect borrowers on base rate tracker mortgage immediately,
while borrowers who had opted for standard variable rates would have to wait as
it depends on their lenders.
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