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Long-term fixes need competitive pricing, says MarketPlace

Penalty-free, long-term fixed rate mortgages will need to be priced more competitively if they are to become an attractive proposition, warns The MarketPlace at Bradford and Bingley.

Responding to plans announced this week that 25 to 30-year US-style fixed rate deals could soon be available to European borrowers without any redemption charges, David Bitner, head of product operations at The MarketPlace, says: “This is an exciting concept, were it not for the proposed interest rates of 6.5-7%. With short-term discount and tracker deals in the UK at around 3.5% and short-term fix rates at between 4% and 5%, long-term rates pitched at around 7% would be unappealing for the majority of borrowers.

“The chancellor favours a move towards longer term fixed rates so the economy can be controlled by the use of interest rates without risking boom or bust in the property market. However, until a way can be found to price these products with more attractive rates and no penalties, any plans to make these the product of choice in the UK mortgage market are doomed.”

Bitner estimates that a client looking to borrow £100,000 on a repayment basis over 25 years on a fixed rate of 7% for the life of the loan would be paying £706.78 per month, compared to a life time tracker at 0.5% above the Bank base rate where they would be paying £541.74 per month.


A&L increases basic variable rate to 5.79%

Alliance & Leicester has increased its basic variable mortgage rate by 0.25% to 5.79%. The rate will take effect from November 24 2003 for new borrowers and December 2 2003 for existing borrowers. A&L&#39s tracker products are also subject to change, with new borrower products increasing by 0.25% from November 10 2003 and existing borrower […]

L&G extends its trading platform

Legal & General has extended its electronic trading systems for its protection range so that more cases can be processed automatically through the whole new business process. The company has enabled IFAs and business partners using its eProtection Choices range to benefit from an automated underwriting service similar to that of its Online Term Assurance […]

HRP paper delay slammed

Mortgage providers have criticised delays in the publication of the Treasury&#39s consultation paper on home reversion plans. The document will enable the government to poll the industry as to the suitability of home reversion schemes falling under the regulatory umbrella. Although Norwich Union welcomes the steps taken by the Treasury it says that, with a […]

Eight out of nine MPC members vote for rate rise

The Bank of England&#39s Monetary Policy Committee voted overwhelmingly in favour of raising interest rates earlier this month, minutes of the meeting reveal. Only one of the nine MPC external members, Marian Bell, opposed the decision to raise the cost of borrowing. The committee&#39s decision saw rates rise by 0.25% to 3.75% – the bank&#39s […]

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Financial advice can benefit customers by £40,000

New research shows those customers who receive financial advice can be better off on average by £40,000 We’ve sponsored a research project with the International Longevity Centre – UK (ILC-UK) to produce ‘The Value of Financial Advice’ report. This independent research demonstrates that customers who take financial advice can, on average, be £40,000 better off than those […]


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