What the papers say- 21st and 22nd May 2011

Rising inflation has stoked fears that the Bank of England could raise interest rates sooner than anticipated, and this weekend’s financial press looked once again at the dilemma faced by borrowers over what type of rate they should be going for. The Telegraph, Mail on Sunday and Sunday Times all highlighted the fact that fixed rates have fallen recently, making remortgaging a more attractive prospect. Experts welcomed the renewed competition, saying that borrowers have struggled to find deals competitive enough to tempt them away from their Standard Variable Rate, but the uncertainty over what will happen to rates does little to help people decide whether to fix or take a cheaper variable rate. Anyone delaying their decision for too long however could find that they lose out when rates start to climb again. The Financial Times reported this weekend on a 30% increase in self-build mortgage offers in the first quarter of 2011 compared to this time last year, despite the fact that securing finance is considerably harder than it once was. Banks such as Birmingham Midshires and Halifax are still an option, but building societies offer more choice, with Norwich & Peterborough recently increasing their maximum loan-to-value from 75% to 80%. Elsewhere the Independent on Sunday revealed that, despite concerns over the mortgage market, financing a second home is still possible. Experts say it is important to decide on the use of the second home before looking for financing, as some will be more difficult than others to secure a mortgage on. Holiday lets for example are limited as the rental income is variable depending on seasons.

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