High LTV loans will also be hit if the eurozone crisis forces UK banks to write off debt exposure, said John Charcol broker and commentator Ray Boulger.
“If this results in a reduction in their mortgage appetite, it is likely that the first sector to be hit will be the higher loan-to-value mortgages, where there has been a significant improvement in availability and pricing over the last few months,” he said.
The banking crisis will get worse as euro contagion spreads, which will inevitably impact all European banks including the UK, said Boulger.
“This suggests either buying a lifetime tracker, where the price of the best is generally only 0.25%, 0.5% higher than for a two-year tracker, or a reasonably long-term fixed rate, say for five years,” he added.
The MPC announced rates would stay on hold at 0.5% for the 33rd time yesterday, with no change to quantitative easing following a £75bn boost last month.
