Author: Andy Adams
By now we all know how dire the financial world has become, how the current credit crunch has meant big problems for most of us. The rising cost of living has left a lot of people struggling to make it, thanks to rises in food costs and fuel prices.
In a week where the Prime Minister urges other countries to cut down on food wastage there is other news in finance; the mortgage market is a tough one to get into at the moment but recent goings on in the market have left some confused.
Mortgages tend to be closely related to the swap rates of banks, these rates peaked three weeks ago but still the mortgage rates continue to rise. A recent survey has found that the average interest rate for a two year fixed mortgage is up to 7.07% in some cases.
As a result of this lenders are finding that they are fast running out of business, and on the other end of the problems are first time buyers who are unable to find a deal that suits them if they can find one at all. Others affected include those who are coming to the end of their fixed-term deals and looking to renew their mortgages.
These are likely to be the worst hit as a borrower coming to the end of a three year fixed 150,000 mortgage could see a monthly increase of £158 if they wanted to renew for another three years.
The big question over the swap rates issue is whether mortgage lenders are going to start playing fair when swap rates go down. At the moment they’re much quicker to act when the rates go up as they respond in kind but when rates drop or stay put the rates either stay put or continue to rise regardless.
More and more borrowers are losing faith after a deal in April was reached and the Bank of England freed up banking via liquidity schemes, schemes which are yet to benefit the borrowers. It is hoped that this situation will be rectified soon and the chancellor has been urged to take note if situations worsen over the coming months.
