View more on these topics

rate rise in May inevitable, says Clear Cut

Clear Cut Mortgages says while the Bank of England&#39s decision to rates is good for borrowers, it now means a rate rise in May is almost inevitable.

It says that the Bank has avoided exerting too much pressure on borrowers. A quarter point rise would have left households ££70 worse off than they were in November when the Bank started raising rates, and that would have been a substantial hit on the borrower&#39s pocket.

But Ben Thompson, director of Clear Cut Mortgages, says:”It will be interesting to see just what impact a rise next month will have. Recent campaigns by consumer groups, independent advisers and the Treasury to get consumers to switch to fixed rate products has contributed to some 36% of households now not being affected by interest rate decisions, so the influence that a base rate change wields is much reduced as a result.

“This is a relatively new situation for the UK and it is difficult to predict what the effect will be.

“At the same time, there will soon be swathes of households coming to the end of one and two year deals which were taken out when rates were very low, and the market is a verydifferent place now. Again, the impact of this scenario is largely untested. What is certain is that with a May base rate increase on the cards, many households will experience a sudden hike in monthly repayments as new, short-term deals may be priced at far higher rates than those they are used to.”

Clear Cut Mortgages advice advice to borrowers is to switch to a fixed rate deal if they&#39re concerned about being able to afford the impact of a future rate rise, or if they&#39ve borrowed heavily to get onto the housing ladder.

For those who feel they have the cashflow to absorb a future hike in rates, or who have smaller mortgages relative to income, discounts represent good value for money. For example, over a two-year period, they are around 0.75% cheaper than fixed rates.

The company is offering a fixed rate of 4.42% through Chelsea until April 2006, and a discounted rate of 3.89% with Lambeth for two years. For those put off remortgaging due to the perceived associated costs, Clear Cut is offering an exclusive fees-free mortgage with a discounted rate of 4.25% until March 2006.


Banking-Insurance Services appoints mortgage adviser

Banking-Insurance Services has appointed Richard Marsden as independent mortgage adviser for the DE postal region. Marsden established his partnership in November 2003 and offers in excess of 50 lenders and 7,000 products. The company also have access to the insurers from across the market covering buildings and contents, life cover and ASU and MPPI.

North/South divide to return in 2004, HSBC report suggests

Regional growth trends were turned on their head in 2003, a report by HSBC&#39s economists reveals. The report shows that London, which is normally one of the fastest-growing regions, was one of the slowest, while the North-East, the worst performer in the late 1990s, was one of the best, with the strongest growth of both […]

Network route will not be a soft option

Compliance with mortgage regulation will be top of the agenda come Mortgage Day on October 31. Yet amazingly many brokers believe joining a network as an appointed representative is an easy way out. There is a false assumption that if you are directly authorised, the Financial Services Authority will be crawling all over you but […]

Welsh counties shoot to top of house price rise list, says Halifax

In the Halifax&#39s 2003/2004 county house price league, two Welsh counties have come out on top in terms of the biggest house price rises over the past 12 month. Gwynedd saw a 57% rise and West Glamorgan saw a 56% rise. All of the 10 counties with the biggest price gains during the last 12 […]


News and expert analysis straight to your inbox

Sign up