A&L response to interest rate decision

Amanda Jarvis

March 9, 2006

Mehrdad Yousefi, head of intermediary mortgages at A&L, said: “Once again interest rates remain on hold and many expect rates to remain unchanged for the next few months.

“Clearer evidence of the underlying strength of household spending and wage settlements is required before the Bank of England is confident that any change in a direction of interest rates will not have a detrimental impact on inflation or on overall growth in the UK economy. As a result, most commentators expect rates to remain at current levels – with some pointing towards a cut in the Spring based on mixed economic data seen so far this year.

“The housing market has strengthened both in transactions and prices as evidenced by the highest January lending figure on record from CML figures. Whilst there is still affordability pressure on first-time-buyers, most regions in the UK are witnessing a revival in home buying activity with the prospect that the overall mortgage market in 2006 will be slightly stronger than last year.

“Borrowers are still benefiting from fierce competition between lenders with fixed rates and base rate trackers proving popular. Fixed rate deals continue to be extremely attractive to those who are on a tight budget and want security in their payments, whilst those who have a more flexible budget may opt for a
short-term base rate tracker product which also offers value.”

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