When I read that Mr Shapps, who I actually like, had made a speech within which he called for 30 year fixed rate mortgages I must admit my shoulders sagged a touch.
My first reaction was if that was the best idea he can come up with then we are all up the proverbial creek without a you know what. In reverting back to an oft tried and never achieved call for 30 year mortgages we suddenly saw that actually, no one in power at least, seems to really get the issues.
As politicians all over the world wonder how the hell they are going to get out of the mire that surrounds them, we are beginning to see options taken that are provoking a great deal of debate. The latest is the US’s Operation Twist.
First tried back in 1961 as an “experiment” whose results are still disputed, this involves the Fed selling short-term bonds and, here’s the twist, replacing them with longer term ones. The result is that as more long-term bonds are purchased interest rates should fall, (it’s a supply and demand thing, sort of).
To coin a phrase, rumours of the death of the Buy-To-Let market have been grossly exaggerated! As regular readers will be aware, we have stated that 2011 will be a year when more lenders re-enter the Buy-To-Let market as First Time Buyers continue to struggle to get on the housing ladder, rents harden and landlords look to take advantage of a ponderous housing market before the economy really starts to recover fully.
As predicted, the first major release of the year in this sector already looks like a beauty, coming from the company that were synonymous with professional landlords before the credit crunch, Paragon.
Apparently, according to some sources, remortgaging is now back in vogue and enjoying somewhat of a renaissance as it is officially now the case that remortgage products are cheaper than most lenders Standard Variable Rates.
Some of us have already been talking about this since the start of the year, and it is nice to be backed up by some weighty reports. Moneysupermarket.com, for example, have stated that even when taking the new mortgage product arrangement fees into account the “best” fixed rate and the “best” tracker product over 2 years will beat the majority of lenders SVR’s.
Today’s inflation figures, rising dramatically to 2.9%, could well bring to an end the ‘rate complacency’ we have seen among borrowers over the past year or so.
Whilst there are suggestions that this spike in inflation has been expected and is merely temporary, it is unlikely to drop off sharply if recovery does continue to grow and will undoubtedly put pressure on the Bank of England to seriously consider finally raising interest rates.
This is a real shot across the bows for borrowers, many of whom are quietly banking on a low interest rate environment in the short term. But this is a risky game to play.
Andrew Montlake, Communications Director at Coreco and ‘Mortgage Personality of the Year 2008’, gives his views — honest and no holds barred — on the latest developments within the mortgage and property markets.A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £495.
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