Print friendly version 17 Jul 2008

Broker signals optimistic outlook for rates

The outlook for mortgage rates has improved thanks to a dramatic fall in swap rates over the last month, according to John Charcol.

The mortgage brokerage said recent news that Nationwide is to cut both tracker and fixed rates was “a sign of things to come”. Drew Wotherspoon, spokesperson for John Charcol, said: “For far too long, the status quo of the mortgage market has been increasing rates and misery for most borrowers. The crunch has seen liquidity in the market all but dry up, but news from Nationwide that they are cutting both tracker and fixed rates will come as a huge relief for all borrowers.”

Swap rates have dropped by 0.7% from a peak a month ago, Wotherspoon added. As lenders use these rates to determine the price of their fixed-rate mortgages, it should allow them to offer better priced products, as Nationwide has. He continued: “I would hope to see other lenders follow suit soon bringing some much needed competition to a market that has been depressingly bereft of vying lenders.

“The good news does not stop at just fixed rates either. Nationwide has also reduced the price on its tracker mortgages with the most significant movement on its lifetime tracker, coming down an impressive 0.36% to Bank Base Rate plus 0.98% for those with a 25% deposit – albeit with the introduction of a modest £599 arrangement fee.

With the Base Rate likely to fall soon, according to Wotherspoon, this deal should be good value for borrowers happy to sacrifice the security of a fixed rate. “Yet, with the ability to drop into a fixed rate at any time, this does offer the added security that some people will crave," he concluded.

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