View more on these topics

Savills not surprised by base rate rise

Following todays Bank of England Monetary Policy Committee announcement of a base rate rise of 0.25%, Savills Private Finance says the rise has come as no surprise as the Bank has become increasingly worried about high levels of consumer debt.

Savills says the increase has also opened up the debate as to whether borrowers should be opting for tracker or discount mortgages.

Simon Jones, director at Savills Private Finance, says: “This rise is the fourth 0.25% increase since November and we cannot rule out further movement before the end of the year. Those people who have had to stretch their mortgage to afford their property will need to be cautious, especially those on tracker and discount mortgages.

“Those borrowers who have opted for a tracker mortgage are aware from the outset that their mortgage will move with base rate, however those on discount mortgages take more of a risk. Although discount mortgages often represent excellent value, the drawback is that lenders have full discretion as to the rate at which they set their SVR.”

He adds: “After last month&#39s rise, most lenders passed on the full 0.25%, however, there were some lenders who increased their margins by as much as 0.45%. Considering that rising interest rates have already put a considerable strain on many borrowers, this is a rather unfair move and borrowers will feel rightly aggrieved.”

Recommended

BANK OF ENGLAND RAISES INTEREST RATES BY 0.25%

The Bank of England&#39s MPC committee today voted to raise interest rates by 0.25%. A statement from the Bank says: “The global economic recovery is continuing. In the United Kingdom, official data and business surveys suggest that output growth remains around, or above, trend. Household spending, public consumption and investment have all grown strongly and […]

The Mortgage Mole

Losers “What a shambles” “A complete farce” “Sweet FA to do with this market”. Just some of the comments made to Mole following the hilarious efforts of a certain publishing company to host their first &#39Mortgage Awards&#39 at London&#39s Quaglino&#39s restaurant last Wednesday. With lenders picking up awards for sectors they don&#39t operate in and […]

Newcastle signs first buy-to-let customer to NMSL subsidiary

The Newcastle has signed up its first buy-to-let customer to a new subsidiary set up to provide mortgage processing services for other financial providers. Newcastle Mortgage Services Limited was launched in response to a growing demand for the society&#39s processing capacity. It has just confirmed an agreement with buy-to-let specialist Portfolios of Distinction. Newcastle says […]

Co-Op SVR hike shocks brokers

Co-Operative bank has been slammed by brokers for raising its SVR by 0.45% from 5.34% to 5.79%. But the lender says that such a large rise was necessary to allow it to offer a better range of discounted products to attract new borrowers. Paul Lawler, spokesman for the Co-Op says: “We&#39re stuck between the devil […]

HMRC helping to remove artificial gains

An investment bond offers investors certain tax advantages, one of which is the ability to take partial surrenders from the investment. This facility allows the policyholder to withdraw amounts up to 5% of the amount invested each policy year on a tax deferred basis, without incurring any immediate tax liability. This tax deferred allowance can […]

Newsletter

News and expert analysis straight to your inbox

Sign up