When US Federal Reserve chairman Ben Bernanke recently announced that it was planning to scale back its quantitative easing programme this prompted a surge in the price of five and 10 year swap rates.
Paragon Mortgages was subsequently forced to pull its entire range of fixed rate buy-to-let mortgages and other lenders, including some of the bigger building societies, have been forced to withdraw selected products.
Writing in a column for Mortgage Solutions, Jon Charcol senior technical manager Ray Boulger said he felt rates had ‘bottomed out’ and that it was a case of when, rather than if, mortgage rates would increase.
In the latest Mortgage Solutions People’s Poll 73% agreed that fixed rates had reached their lowest point with just a quarter (27%) believing that they still had room to fall further.
“The message for consumers is that if you want a fixed rate mortgage there is nothing to be gained by waiting and a very real risk you will end up paying more if you do,” said Boulger.
“It is also another reason for choosing a longer term fix, say five or 10 years, on the basis that the premium compared to a two-year fix after factoring in fees is relatively small and a price well worth paying, subject to the longer lock in period being acceptable, as the increasingly volatile market highlights the risk that remortgaging in two years’ time might only be available at higher rates than are on offer today.”
