Fixed rate mortgages start to come down
October 6, 2007
Homeowners are keeping their fingers crossed in the UK, hoping that a fall in interest rates attached to fixed rate mortgages signifies that the interest rate has finally peaked and that there will be no further imminent interest rate rises that could further impact upon monthly repayments.
Many homeowners are already struggling to keep up with repayments, and could really struggle if the interest rate rises again.
A number of lenders in the UK have announced that the interest rates on fixed rate mortgages will be coming down, and this includes the Halifax, the Royal Bank of Scotland, and the Britannia.
It is thought that the many homeowners whose fixed rate deals are due to come to an end in the coming weeks will be able to benefit from these reduced fixed rates, which will enable them to switch to another fixed rate scheme, although at a higher rate than they were on previously.
One economist and industry expert stated: “It is too early to say with any degree of confidence whether interest rates have peaked. We are approaching levels at which it may be possible to think interest rates may stabilise or at least rise more slowly but the bias is that risks are still to the upside. This level of interest rates does seem to be restraining the economy and there are signs that consumer demand is slowing. The signs are that with markets a bit bouncy the Bank of England is being a bit more patient.”
The base rate in the UK now stands at 5.75%, a rise of 1.25% from one year ago following five interest rate rises of 0.25% each since that time.
Homeowners have been struggling to keep up with repayments on their loans, with many having to find substantial amounts of extra cash each month to meet the rising repayments on their variable rate mortgage. Another rate rise was predicted for this year, but many are now hoping that this will not happen based on the reduction in fixed rate mortgage rates.
Alan Wright
6th October 2007
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