Mortgage market begins to shift again

26-Sep-2007

A calm appears to be emerging out of the storm of this summer's interest rate rises and still-ongoing credit crunch, as a number of lenders lower prices on their fixed-rate deals.

The Observer has reported that no fewer than three lenders have dropped their rates this week, in response to swap rates and a more optimistic outlook on interest rates.

Woolwich, for example, has lowered its ten, five and two-year fixed rates to 5.59, with advisers now suggesting that the worm is beginning to turn for those looking for a first time buyer mortgage.

"Anyone getting a mortgage shouldn't worry too much […] the outlook is rosier than it was before," commented John Cotton from mortgage broker London & County, speaking to the Observer.

But it's undoubtedly still worth seeking out mortgage advice, with the range of options by no means limited to just fixed rates.

Indeed, estate agency Hamptons International has this week revealed that the popularity of longer-term variable rates doubled between July and August, with more first time buyers and other borrowers seemingly deciding that it would be more advisable to track the base rate in the hope, or even expectation, of a fall in the coming months.

The firm reported that 18 per cent of mortgages taken out over the period were variable-rate, an increase that comments from broker John Charcol seem to support.

Katie Tucker from the firm has said that fixed-rates "are still not low enough to compare to trackers and discounts", especially if a rate cut is forthcoming. Ms Tucker believes fixed-rates will see more widespread cuts in a few months' time because of this.

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