Thursday 13th September 2007
A further rise in the base rate could still see variable-rate customers coming out on top in terms of mortgages, John Charcol proposes.
The independent mortgage broker claims that the products are so competitively priced, they would still beat fixed rates in affordability terms, even if the base rate reaches six per cent.
But the likelihood that this will occur is reduced in light of the sub-prime lending crisis in the US, the broker adds.
Technical manager Katie Tucker comments: "It would make little sense for the monetary policy committee (MPC) to increase the cost of borrowing further at this stage.
"Discount and tracker rates are still priced at such that even if base did reach six per cent, variables would still be cheaper."
Former member of the MPC professor Willem Buiter told the BBC recently of the long-term risk of elevated interest rates on UK mortgages as the US crisis spills over into the domestic market.
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