The end of the fixed rate mortgage?

Former CML senior policy manager Rob Thomas recently commented on the impact of rising swaps on fixed rate mortgages, by saying if swap rate volatility continues then we could see lenders withdraw fixed rate products.

Is the withdrawal of fixed rate deals likely to happen?

Independent mortgage experts Deal Direct think a market-wide fixed rate product withdrawal unlikely.

If swap rates continue to fluctuate as they have over the last few weeks, fixed rate mortgage availability could start to dwindle. However as over 80% of all mortgage approvals are currently for fixed rates deals, lenders would reduce their new mortgage lending to virtually nothing by withdrawing the products within their mortgage range.

Lenders aren't likely to take themselves out of the mortgage lending business, however they could easily increase rates to cover their higher costs.

Already we have seen that swap rate volatility has led to some lenders increasing their fixed mortgage rates.

The fear for many looking for a deal is the age of cheap mortgage deals could be over before they have managed to purchase a home or remortgage.

If you are looking to buy a new home or remortgage, the advice is don't delay, act now if you want a cheap rate.

Over the last two weeks we have seen changes to various lenders product ranges. Paragon has chosen to pull its fixed buy to let deals, and other lenders such as the Newcastle BS, Skipton, and Coventry BS rather than withdrawing their fixed range have increased their rates.

More recently the intermediary arm of the Co-operative Bank, Platform, has announced that its fixed rates were increasing range wide due to swap rate volatility, and Precise Mortgages has said that should swaps continue to fluctuate then it may also have to increase rates.

The hope for those looking for a mortgage is that Government initiatives such as Help to Buy and Funding for Lending, will continue to strongly influence fixed rate mortgage pricing overriding the effect of a swap rate increase.

Whether this will be the case is presently unknown, what is known is lenders are coming under increasing funding pressure and they are likely to start passing any increase onto borrowers. With this is mind if you are looking for a fixed rate deal you are advised to act without delay.

Don't miss out on a good deal,

fix now before the best deals are gone.

Call 0800 048 8828.