Main Site Navigation

• current accounts
• savings
• credit cards
• insurance
• loans
• mortgages
• investments
• pensions
• finance blog

You are here: > Home > Mortgage > Mortgage News

search:    

Rate fix disappointing for homeowners

Monday 8th October 2007

Homeowners could be disappointed by the Bank of Englands decision to keep the base rate fixed at 5.75 per cent for another month, it has been suggested.

James Caldwell, director of Fair Investment Company, asserts that a 0.25 per cent decrease could have been beneficial to many property owners in the UK.

"On a £200,000 mortgage, even a reduction of just a quarter of a per cent would mean a saving of £30 a month," he explains.

However, he concedes that the cautious approach is "not surprising" in light of the US sub-prime lending crisis and the run on Northern Rock in recent weeks.

Mr Caldwell predicts that the Bank may be waiting "until the dust has settled" to determine whether a decrease in the base rate is required.

Financial services provider Alliance & Leicester advises that there are still options available for those seeking a mortgage.

But with the future direction of any interest rate change unclear, a spokesperson for the firm recommends that consumers assess their own financial situation.

This could allow them to determine the best course of action, according to director of mortgages Stephen Leonard.

"A tracker mortgage is a sound option in the current interest rate environment," he begins.

"However, borrowers opting for a tracker mortgage should ensure they are financially comfortable enough to withstand an increase in monthly payments."

This would be likely to occur if the base rate were to rise again in the coming months, he concludes.

And short-term affordability pressures may not rule out such a move by the Bank, as Mr Leonard notes that the monetary policy committee appears to be taking a "mid to long-term view about inflation".

©

Other related stories