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MPC will have to perform a balancing act

Swap rates fell slightly last week but not enough to affect any lender rate decisions.

• One-year money is down 0.04% to 4.75%

• Two-year money is down 0.05% to 4.94%

• Three-year money is down 0.02% to 5.06%

• Five-year money is down 0.02% to 5.17%

Last week&#39s raft of fixed rate increases had been expected – Halifax, Cheltenham & Gloucester, West Brom, The Woolwich, Bank of Ireland and Nationwide all repriced.

At times like this you appreciate lenders that use emails for rate updates – it makes it easier to stay on top of rates, it&#39s possible to instantly distribute rates to colleagues wherever they are and it&#39s easier to store the information. C&G please take note.

The Woolwich launched a guaranteed lifetime tracker rate this week at base plus 0.04% for two years then 0.95% for the life of the loan but it does not look like good value long-term compared with Bank of Scotland which has a rate of base plus 0.69% for life.

Northern Rock wins rate of the week with its two-year fix at 4.69% though fees are painfully high. Once again it is villain of the week, this time for launching a rate then pulling it a few days later.

Three-month LIBOR is up 0.01% at 4.38% and the City is expecting another 0.25% rise in the base rate in the next three months. Twelve-month LIBOR is down 0.03% at 4.79, indicating a 0.75% increase in the next 12 months.

The minutes have been released for April&#39s Monetary Policy Committee meeting and show that there was an eight to one decision to hold rates.

March&#39s inflation figure unexpectedly fell from 1.3% to 1.1%. In theory this should ease the pressure to increase the base rate as the target is 2%. But in reality the effects of house price inflation, consumer debt and expenditure on future inflation concern the MPC.

Jonathan Cornell is technical director Hamptons International Mortgages


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