The rate at which banks lend to each other has impacted some contractor mortgage rates, according to a recent survey by thisismoney.co.uk.
Before the global downturn began in 2008, some specialist lenders offered tracker mortgages that were linked to the LIBOR rather than the Bank of England base rate. As we all know, the BoE interest rate has remained at a historic low of 0.5% for over 2 years.
At the start of 2009, trackers linked to LIBOR proved advantageous for borrowers because the LIBOR rates reduced. However, LIBOR rates increased by about 10% towards the end of 2010. They currently stand at slightly over 0.8% as opposed to the Bank of England’s base 0.5% rate and this means trackers linked to LIBOR are more expensive.
Another recent survey, this time from uSwitch.com, has revealed that 22% of homeowners are now concerned about the effects a rate rise from the central bank will have on their monthly mortgage repayments.
Meanwhile, the housing market is still stuck in a rut and mortgage lending remains subdued. In February, gross mortgage lending increased slightly from £9.475 billion in January to £9.5 billion. Sellers are finding it increasingly difficult to sell as people stay away from the market until economic certainty returns.
Will George Osborne have good news for the housing market when he presents his budget later today? Let’s hope he has…
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