But the good news for the mortgage market is that it is in a solid position to absorb a rise after what has been a great 2006 so far.While some of the recent strong momentum may be lost, the rise should cause few in the market any sleepless nights. A decision to increase rates would be sensible. Inflation is 0.4% above its target and the economy is performing stronger than expected. While energy prices have come down recently there are indications that inflation is creeping back onto the high street. This could lead to further inflation during the early 2007 wage rounds. With the next inflation report out this month, now is the obvious time for a rate rise. It is a testament to the strong position built up this year that we can face the prospect of a second rise in three months without huge concern. It will almost inevitably mean that mortgage approvals reduce slightly – by 5% to 15%, according to Council of Mortgage Lenders’ estimates – and it could have a minor impact on confidence. But the market took the surprise 0.25% August rate rise in its stride. This time, an increase has been expected for some time meaning that those in the industry and borrowers have had the chance to plan and budget for it. So this small rise alone should not undermine the mortgage or housing markets. An interest rate rise is likely to provide a further boost for the specialist market in the medium term. More people will incur minor credit history blemishes as they deal with higher repayments on unsecured debt as well as their mortgages. They will not be in a financial crisis but they will fall into arrears on the odd payment. As long as these people pass the affordability criteria of lenders there is no reason why they should not be able to borrow money in the future. Many of them will have experienced life-changing events such as divorce so it’s not simply a matter of bad financial planning. Refinancing could help put them on a more solid footing. Lenders must be ready to help brokers deal with more sub-prime cases. Overall, the market is in good shape. A small interest rate rise now might well save the need for a larger rise later. Meanwhile, we can look forward to records being broken by the end of 2006, providing some good headlines for the industry.
LMS is looking to recruit a new managing director for its survey and valuations business.The post has become available as the present managing director, John Archbold, moves on to head up a property development company. His new venture is a major change in career and he will be responsible for the UK operations of an […]
The Finance Planning Group has adopted a new style after months of planning and development with an overall objective to grow business for all areas of the group.The new corporate identity combined with an integrated marketing plan is set to assist the long term growth of the company. It provides a platform to increase awareness […]
Accord Mortgages has launched the second phase of its integration with Trigold with the creation of a seamless online connection for full mortgage applications through Trigold’s E-trading centre. With over 50 leading lenders able to receive online applications via the E-trading centre, Trigold is the undisputed leader in mortgage trading and the E-Trading Centre is […]
Research from Alliance & Leicester Personal Loans shows that consumers and estate agents are differing on their views on the type of home improvements that will add value to a property. To add value, estate agents are more likely to favour improvements that create space or improve decoration, whereas consumers are more likely to support […]
Strong relationships don’t just happen by accident. They take time, commitment and effort. When we spoke to a number of advisers last year, it was no surprise to hear regular reviews were at the heart of their ability to forge deeper connections with their clients. It’s a chance to catch up. A dedicated checkpoint to […]
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