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News: Fixie withdrawal inevitable

Fri, 04 May 07

The withdrawal of fixed-rate mortgages should come as "no surprise", an industry body has revealed...

The Council of Mortgage Lenders (CML) said:

“It is inevitable that the lenders have to re-price their products in times of rising interest rates and inflation.  As the tranches of funding used for fixed-rate products starts to expire, they will have to be replaced at the current cost, causing fixed-rate finance to increase”

Sue Anderson, spokesperson for the CML, claims that this happens "every time" during a period of rate changes, which should not surprise people.

"On each occasion that there's any rate change or any expectation of rate change or market movement in rates, people act as if it's a surprise when this happens," she says.

The Centre for Economics and Business Research explains that the popularity of fixed-rate mortgages is down to the "reactionary" nature of consumers.

Jonathan Said, senior economist at the research centre, comments:

“there is a case for consumers to opt for fixed-rate products since it is possible that interest rates might yet average slightly higher than their current levels in the in long-term”.

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