Talk turned once again to rising interest rates in this weekend’s financial press, following last week’s news that unemployment had fallen more sharply than expected. The Guardian and Sunday Times both reported on the varying forecasts, with some analysts predicting a bank rate rise as early as the end of this year. General consensus suggests a 2015 increase to be more likely, but experts recommended that anyone due to remortgage in the next few months should secure a deal in advance. With the Government Funding for Lending initiative no longer available for home loans and an upward trend in swap rates, rates have already begun to rise from their lowest point.
The Telegraph revealed that British lenders are coming under renewed pressure to re-introduce 25 year fixed rate mortgage in a bid to stabilise the property market. These deals are common in the USA, France and Denmark, but have dwindled out here due to lack of demand. Brokers suggested that lenders would need to remove or limit the restrictive Early Repayment Charges in order to attract borrowers.
Elsewhere, the Mail on Sunday reported that borrowers on maternity pay or facing high childcare costs could see their mortgages applications refused or scaled back once strict affordability tests come into force in April.