Money News
This week's news that inflation in March rose to 3.1% has made a further rise in the Bank of England's Base Rate a near certainty. The money markets have reacted to the news by pushing swap rates up to their highest levels this year.
What this piece of technical jargon means for the rest of us is more expensive fixed rate mortgages. First to withdraw fixes was Alliance & Leicester, followed by Halifax, Newcastle Building Society, Northern Rock, Principality Building Society, Skipton, West Bromwich Building Society, Yorkshire Building Society.
At a time of when there is a strong prospect of higher interest rates in the near future, fixed mortgage rates are obviously very popular with borrowers. Many first time buyers have been opting for fixed rates because they have had to push themselves to the limit to afford to buy - the outlook now is a of slowing housing market with higher fixes pricing some prospective buyers out of the game.
One alternative to less attractive fixed rates in the near-term could be short term pain for longer term gain - take out a tracker rate mortgage now, which will become more expensive if / when base rate rises but will also benefit from interest rate cuts that some economists still expect before the end of the year.
19 April 2007 © Moneyextra.com
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