You are here: Home - News -

Lenders likely to push up mortgage rates early next year, AMI warns

by:
  • 23/12/2015
  • 0
Lenders likely to push up mortgage rates early next year, AMI warns
Rates are likely to rise marginally in the first quarter of next year as lenders prepare for the Mortgage Credit Directive (MCD), the Association of Mortgage Intermediaries (AMI) says.

In the trade body’s quarterly economic bulletin, it said despite expectations that the bank base rate would not be raised until 2017, lenders were likely to rein back pricing battles to focus on gearing up for the MCD between February and March.

AMI added that if strong wage growth coincides with higher mortgage rates, the Bank of England could be forced to bring forward a base rate rise to push up wider interest rates.

It said increases in mortgage pricing could have a negative impact on borrowers who find themselves unable to remortgage under current affordability rules brought about by the Mortgage Market Review.

AMI said: “Lenders have been historically bad at using the transitional rules to aid struggling borrowers and we think this reluctance to flex affordability controls is not likely to change following MCD which reduces the options for mortgage prisoners further.”

The remortgage market has enjoyed a resurgence in activity since Bank of England governor Mark Carney hinted that the first base rate rise in over 15 years could be as early as the first quarter of 2016.

As the seeming threat of a rate rise in 2016 fell away, AMI said the remortgage market could start to come under pressure.

It added: “Intermediaries are seeing strong levels of business in the residential purchase and buy-to-let markets and as such are not revisiting their client back books to initiative remortgage conversations to the extent they might [usually].”

There are 0 Comment(s)

You may also be interested in

Read previous post:
Geoff Hall, MD Berkeley Alexander
The GI year in review – Berkeley Alexander

It has been a year of regulatory change. General insurance (GI) continues to be a vital element of clients’ financial...

Close