View more on these topics

Longer-term fixes ‘have bottomed out’

Business chart drawn on a blackboard

Longer-term fixed rates look set to increase because 10-year gilt yields have risen from a low of 0.527 per cent in August to 0.98 per cent at the end of last week.

The past fortnight has seen lenders continuing to cut prices on some of their fixed-rate deals. However, with swap rates edging up and the markets already pricing in any further potential cuts to the Bank of England base rate, brokers believe fixed-rate deals have reached the bottom.

John Charcol senior technical director Ray Boulger says: “In the past week or so we have still seen some rates come down but I think they have probably bottomed out.

“Longer-term fixed rates are likely to start creeping up as 10-year gilts moved sharply following Prime Minister Theresa May’s comments suggesting the Bank of England should rein in quantitative easing. A 0.15 per cent cut to base rate has already been priced in to the market.”

Speaking at the Conservative Party conference last week, May criticised the BoE’s policy of low interest rates and money printing, saying it had benefited only the wealthy. She said: “People with assets have got richer. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer.  A change has got to come. And we are going to deliver it.”

The prime minister’s criticism was unusual given the independent status of the BoE but Downing Street denied it was an attempt to influence monetary policy.

Your Mortgage Decisions director Dominik Lipnicki says that, even if the Bank were to continue on its path of rate cuts despite May’s objections, a levelling-out in fixed rates is inevitable.

He says: “The costs of lending are still there regardless of how low the base rate goes. The only way is up for fixed rates. There won’t be big increases as lenders are still seeking to reach their year-end targets and many are failing.

“Fixed rates will go up in a measured way but for borrowers it is as good a time as ever to remortgage.”

Ipswich Building Society chief executive Paul Winter says lenders will not fully reflect any further base rate cut because it will be “unaffordable for them”.

He adds that building societies in particular would be loath to cut interest rates any further because savers, who are already suffering, would earn even less on their money.



One in eight self-employed borrowers rejected for mortgage: Nottingham BS

One in eight self-employed borrowers have been rejected for mortgages or remortgages, Nottingham Building Society has found. A study found 12 per cent of self-employed workers have been turned down for first-time mortgages or remortgages, despite 26 per cent of those surveyed saying they were earning more now than they were when in full-time employment. […]


Brightstar launches HNW arm Sirius Private Clients

Brightstar Financial has launched high net worth arm Sirius Private Clients. Sirius will focus on financing for residential and commercial real estate transactions. The Sirius team will be based at Brightstar’s City of London offices and work with clients looking for deals of £1m or more on buy-to-let, residential and commercial mortgages, development and bridging […]

Limited company buy-to-let purchases reach 63%

The number of landlords choosing to structure their property deals via limited companies is on the rise, as buy-to-let mortgage data reveals these now make up 63 per cent of all purchase applications. The figure for the third quarter, from Mortgages for Business, is up from just 21 per cent before the changes to tax relief […]

UK: mid-year review and outlook

By Mark Martin, manager of the Neptune UK Mid Cap Fund, and Scott MacLennan, manager of the Neptune UK Opportunities Fund H1 2014• Equity markets continued to show strength: despite a strong rally in 2013 driven by a market-wide re-rating, equity markets continued to generate positive returns for investors. Economic activity continued to be stimulated […]


News and expert analysis straight to your inbox

Sign up