Housing Minister Grant Schapps has been criticised recently for encouraging mortgage lenders to offer longer term fixed rates of up to 30 years in order to give borrowers more security, and experts in this weekend’s financial press continued the discussion. Brokers pointed out that longer term rates are far too inflexible as they lock borrowers in for lengthy periods of time, during which interest rates as well as personal circumstances can change dramatically. The Guardian reported that in 2007, when base rate was 5.75%, then-Chancellor Alistair Darling made the same call for long term deals, but within 2 years base rate had fallen to just 0.50%. Another major issue, as highlighted in the Sunday Express, is that deals would need to be priced at a rate close enough to short term alternatives in order to attract homeowners, and this has traditionally not been the case. The Sunday Times revealed this weekend that Lloyds Banking Group has become the first bank to raise their Standard Variable Rate since the credit crunch, and with major lenders also increasing fixed rates for the first time this year, borrowers were warned to act quickly to secure the lowest rates. Lenders including Woolwich, Santander and Northern Rock have already announced increases and it is likely that there will be more to come. Elsewhere the Mail on Sunday looked at easing the pain of inflation, suggesting that borrowers look to overpay on their mortgage to clear the debt at a faster rate, while the Observer reported that demand for Buy-to-Let mortgages has increased significantly in recent months as landlords cash in on the boom in rental prices.
What the papers say- 22nd and 23rd October 2011