Mortgage Rates – What’s Happening?

September has seen turmoil in the financial sector including spectacular collapses, some major propping up and some unexpected mergers/rescues.

In America, the Government had no option than to take control of both Fannie Mae and Freddie Mac, who together guarantee around half of all US mortgages. However, that wasn’t the outcome in the case of Lehman Bros, the fourth largest investment bank in America, which filed for bankruptcy a few days later.

Things in the UK have been no less surprising, with HBoS, the largest player in the UK mortgage market, being rescued by Lloyds TSB, overshadowing the Nationwide takeover of both the Cheshire and Derbyshire building societies.

Given the weight of the companies involved, it is no surprise that a lack of confidence has returned to the money markets, with banks reluctant to lend to each other. This has pushed up lenders borrowing costs sharply, with one key measure wiping out all the reductions this year.

With only a few days delay, we are now starting to see this passed on to the consumer. Mortgage rates had been falling steadily since July, but the trend is changing as a number of lenders including First Direct, Woolwich, Yorkshire and Britannia Building Society all increasing rates this week, and we expect others to follow.

If you are looking for a new mortgage, either as a new borrower, or a remortgage customer, you should act quickly as any delay could cost you. Best Buys

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