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      Has The Mortgage Market Ground To A Halt?

      Moneyfacts says mortgage providers remain uncertain over the path of base rate, with the mortgage market starting to "grind to a halt" in the lead up to tomorrow's base rate announcement.

      This is despite its data revealing that the average two-year fixed rate has risen for yet another month, jumping 0.08% to stand at 2.51%.

      This is the largest rise seen since November 2017, the month of the most recent base rate rise, pushing the average two-year fix to its highest level since July 2016.

      However Moneyfacts that although LIBOR and SWAP rate markets have begun to fall again in recent weeks, providers are now choosing to hold rates ahead of the base rate decision.

      Charlotte Nelson, finance expert at Moneyfacts, commented: “At the beginning of the month, all key indicators such as SWAP rates and LIBOR were showing signs that the base rate was likely to rise on 10 May. With the money markets already pricing in this increase, providers had little choice but to follow suit and do the same with their fixed rates.


      “However, the tables started to turn when Mark Carney announced on 19 April that uncertainty over the UK leaving the EU could delay a rate rise. This, coupled with lower than expected inflation, slow manufacturing growth, a fall in the pound and a slowdown in consumer borrowing, has caused the LIBOR and SWAP rate markets to fall in recent weeks. In fact, the two-year SWAP rate has dropped by 0.07% to 1.04% in the last month, seeing it almost back at March’s levels.

      “These markets are clearly quicker to react than the mortgage market. With providers now uncertain over what is likely to happen over base rate they are opting to be more cautious, choosing not to alter their ranges either way, waiting to see what 10 May holds instead.

      “The five-year fixed mortgage rate has taken less of a battering than its two-year counterpart, remaining unchanged this month at 2.91%. This has arguably been driven by greater competition: with more borrowers considering long-term fixed rates as an option to protect themselves from future rate rises, providers have opted to remain competitive to attract these borrowers to their mortgage book.

      “All the uncertainty surrounding a base rate rise in the near future does not mean borrowers should rest on their laurels. Instead they should see this as the calm before the storm, and anyone sitting on their SVR or coming to the end of their deal should consider remortgaging as soon as possible.”

      Source - Financial reporter 09/05/18

      Categories: Home Mover


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