Mortgage rate trends for 2012 difficult to predict - fixed rates are the safe haven!
Mortgage rate trends for 2012 will be extremely difficult to predict as the mortgage outlook continues to remain uncertain, advise the Council of Mortgage Lenders (CML).
However other professionals who want to have stability in the housing market seem 'sure' that mortgage rates are easy to predict. Deal Direct sincerely feel that the state of the UK mortgage market in the coming year will be 'difficult to call', this is a view backed up by the Intermediary Mortgage Lenders group. The euro-zone crisis alone has created a highly unusual level of uncertainty for many.
What is clear form recent demand for fixed term products is that the longer the fixed term the higher the demand. Recent 10 year fixed rate mortgages have seen huge demand. 10 year fixed rate mortgages literally flew off the shelf. This all points to those in the know believing that higher interest rates on mortgages and remortgages are just around the corner. Be it 3 months, 6 months, 12 months or longer most seem certain that rates will rise and when they do it really could be serious.
No one really knows what the UK government, the eurozone and global economies might do next to save their own skins and anything they do could have a significant effect on interest rates. All this uncertainty means that fixed rates are the mortgage borrowers new safe haven!
A poll conducted by the Intermediary Mortgage Lenders Association believes that the weak state of the UK economy could have a serious impact on the housing market over the next 12 months. The poll on mortgage rate trends for 2012 found that many of their members predict inflation will fall towards the end of 2012 by an average of 2.79 per cent, but it was felt that this will have little impact on mortgage lending throughout the year.
The latest CML figures show that UK gross mortgage lending stood at £11.7 billion in December. The figures end a year in which mortgage lending remained at low levels and proved difficult for first-time buyers without a large deposit. It is felt that there is a glimmer of light ahead for households in 2012 as income could start to rise by the end of the year but, continued problems in the euro-zone mean mortgage rate trends and funding prospects are uncertain.
