Abbey tells borrowers not to delay move from SVRs

Ramesh Sharma

June 1, 2004

Preceding the Monetary Policy Committee (MPC) meeting next week, Gary Hockey-Morley, director of mortgages at Abbey, said a Base Rate cut was looking unlikely before Christmas but there were still competitive deals available.

His comments follow those of Ray Boulger, senior technical manager at John Charcol, who encouraged borrowers to move quickly to secure remaining market-leading deals or wait until the New Year when rates may fall.

Hockey-Morley said: “City analysts are less convinced about a change in the rate before Christmas which is good news for savers but not so good for borrowers. Economic news in the UK, and globally, has led to an upward movement in swap rates which has prompted many lenders to increase fixed rates in recent weeks.”

“Put in context, rates are still low compared with the 1990s. However, the overall trend since Autumn 2003 was upward until the Bank of England cut the rate in August.

“Mortgages that track the Base Rate are currently offering competitive deals and financial markets have been signalling the possibility of a cut in the New Year, although this is far from certain. All borrowers coming to the end of a deal should look around for their next mortgage as soon as they can,” he added.

Louise Cuming, head of mortgages at moneysupermarket.com, agreed: “The Bank is likely to hold fire on a rate change this year until inflationary pressure dies down so rather than wait for cheaper fixed deals, consumers would be better off shopping around now.

“As lenders fight to offer the most attractive deal, they’re recouping profits through additional charges which are not always apparent or fully taken into account by the buyer.”

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