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Brokers show their value as rates rise

There’s never been a better time for brokers to get in touch with their clients. The revelation last week that Bank of England governor Mervyn King was pushing for a 0.25% rate rise in the last Monetary Policy Committee meeting was a stark reminder to borrowers, brokers and lenders that interest rates of 6% or more could soon be a reality.

Although swaps dipped slightly last week (see Marketwatch), they are still pricing in around three additional 0.25% base rate rises, taking us to over 6% already.

And with the latest figures from the Council of Mortgage Lenders revealing a record £30.6bn of lending in May despite three successive base rate rises, it’s clear the BoE must do something to slam on the brakes. King has repeatedly refused to rule out further rises if they are required to deal with the threat of runaway inflation.

This is bad news for borrowers. Clients coming to the end of two or three-year discounted deals in the latter part of this year are in for a shock. Already overstretched borrowers now face the painful prospect of their monthly payments moving from an interest rate of about 5% to one at 6% or more. Things could get sticky.

So the prospect of more lenders piling into the sub-prime arena – such as John Prust’s Abbey- Merrill Lynch joint venture – is a good thing. More competition will ensure that near-prime and subprime rates remain competitive.

As Ray Boulger, senior technical manager at John Charcol, reveals in Mortgage Strategy TV this week, one of the best rates at the moment is First National’s near-prime deal, albeit at 60% LTV, which trumps many prime products. There are still great deals out there.

That’s why brokers provide such a vital service in the mortgage market. When the market goes south, only brokers can provide the best value for frightened borrowers.


Loanoptions wins emerging business award, the Wilmslow- based secured loans business, has won the Emerging Business Award at Ernst & Young’s Northern Region Entrepreneur of the Year awards. The awards were held on June 18 at the Hilton Hotel in Manchester. is owned and run by Andrew Moody, who set up the business three years ago. It has […]

French lenders increase LTVs for UK and Irish nationals

French lenders are now offering higher LTV mortgages to UK and Irish residents, research from Assetz Finance reveals.The maximum LTV ratio typically offered by French lenders until now has been between 80%-85%. Research by Assetz Finance has revealed that lenders will now offer up to 90% LTV to UK and Irish buyers on holiday homes, […]

Society calls on Brown to make Stamp Duty changes

Nationwide has called on Gordon Brown to do more to help home buyers. The society believes Brown, who succeeds Tony Blair as Prime Minister this week, can do this by linking Stamp Duty limits to house price inflation. Nationwide says if the Stamp Duty threshold had been raised in line with house price inflation since […]

Appointment at IHT network

Legal Services Network has appointed former IFA Stuart McCullough as development director. He joins the Inheritance Tax advice network with more than 18 years’ experience in the financial services industry.


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