Mortgages rates - is all movement likely to be upwards?
Mortgage-holders not already locked into a long term fix are anxious to know what mortgage rates are likely to do next.
Mortgage rate predictions are difficult to make with any level of accuracy. What we can possibly say is that mortgage rates have most probably already hit their lowest point. Lower rates are not anticipated at the moment, more than likely rates will continue to climb.
Lenders do have room to lower their mortgage rates further. Their margins are relatively high but they are rationing mortgages to manage their own depleted funds and re-build their balance sheets.
Mortgage holders must remember that in difficult financial times lenders consider risk when setting mortgage rates. Rates are increasing to cover the fear of bad debts and that is likely to remain so for the foreseeable future.
Fixed mortgage rates are influenced by swap rates and the cost of funding on the wholesale money market.
Generally speaking an increase in Libor or swap rates pushes up mortgage costs and a decrease allows rates to be cut. Presently mortgage providers confidence and access to funding are also a factor in setting rates. Due to confidence levels remaining low, lenders demand large deposits and charge high margins above wholesale market rates
When confidence increases and improvements are seen in the banking sector, economy and housing sector, lenders should find it cheaper to raise funds and mortgage rates are likely to come down.
For the most competitive rates on offer contact Deal Direct today.
