Entries (RSS)Fear of inflation causing mortgage rates to rise.
Fixed rate mortgages from a number of lenders have increased today following increases in funding costs. Rates are now expected to rise to deal with increasing inflation.
Interest rates are at an all time low but it is considered there is now only one way they can go. Once they start rising the rise could potentially be quite steep.
The Guardian highlights the following reasons why there are fears of inflation:
- Oil prices have more than doubled, hitting an eight-month high of $72 a barrel yesterday;
- Manufacturing output in the UK increased in April, prompting predictions that the recession is coming to an end;
- There are fears the Bank of England’s £125bn quantitative easing policy could feed through into rising prices if consumer demand recovers rapidly.
There are growing signs that the housing market is experiencing a spring bounce. Figures issued by the Council of Mortgage Lenders today showed a 16% jump in mortgage lending to people buying a home during April.
Once a few lenders start raising rates the others are quick to follow. In the current environment no lender wants to be the one out of step with all the competition getting more business than they can cope with.
If you haven’t yet fixed your rate now would be the time to start discussing it with your mortgage adviser, before rates go even higher,
July 7th, 2009 at 12:35 am
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December 13th, 2009 at 6:18 am
Home Refinance Loan…
Because of the problems in the housing industry as well as the financial crisis (which is also tied to the housing trans atlantic mortgage boom), the stock market has taken a beaten. Whilst a word of mouth referral from a friend or neighbor is ideal, i…
February 16th, 2010 at 8:14 pm
Inflation is an extremely useful tool for a government because the majority of voters perceive it to be something that “just happens” as a result of factors beyond the government’s control. Of those that think it is controlled, a significant number think that high interest rates actually cause high inflation. Others believe that the Bank of England is genuinely targetting inflation of only 2%. The alternative to the current level of inflation would be to directly tax savings at 3 to 5 % pa and to cut pay levels, in order to give money directly to banks and mortgage holders… similar financial effect but not so voter friendly.
February 16th, 2010 at 10:49 pm
The US will not be far behind Britain in inflation. You can’t keep printing money and borrowing money and not expect inflation to occcur. No solutions from Washington, as they are opposed ideologically, to doing what is needed, which is broad-based business tax cuts.