UK Money News
6th March 2008
Mortgage rates could rise despite MPC hold
Mortgage rates could rise despite today's decision by the Bank of England to leave the base rate on hold.
The bank's rate-setting monetary policy committee (MPC) decided to take no action on the cost of borrowing today, despite concerns about the stalling housing market.
Borrowers, especially mortgage holders, will have been hoping for a cut as the credit crunch has made loans less attractive.
And today's decision to leave the base rate on hold could see conditions become even less hospitable.
"Abbey, one of the biggest lenders, announced that it is raising its fixed and tracker rates from next week - even though the base rate is on hold," warned Melanie Bien, director at the mortgage broker Savills Private Finance.
"It proves that the connection between base rate and mortgage rates has been all but severed as lenders look to improve margins rather than market share.
"Even if base rates come down further, as expected, this won't necessarily filter through to new mortgage deals," she added.
Since the credit crunch took hold, lenders have been reducing their loan-to-value (LTV) ratios and taking more risk-averse approach.
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