It is hoped that the Eurozone summit will be able to end the crisis in the Eurozone, but if they fail then homeowners in the UK might be faced with very high mortgage payments. While the Bank of England have kept interest at 0.5%, homeowners should not see this as a sign that banks will not be adjusting their lending rates either.
In the past few weeks mortgage rates have been increasing as it is expected that if the Eurozone summit fails the rates will start increasing faster than ever. For people wanting to get into the property market it is also going to be much harder.
ING and Nationwide last week said that their mortgage rates will be increasing and several other mortgage lenders followed suit with announcements that their rates would be going up as well. The reason for the increase in mortgage rates is that people are fearing the Eurozone might collapse.
John Charcol is a financial information company and a mortgage expert, Ray Boulger, from the company has said, “Compared with the past, mortgage rates are still relatively cheap and the increases have not yet affected how many people are taking out mortgages. However, this could very quickly change next year as the crisis in the Eurozone becomes more serious. The politicians at the summit are very good at talking about taking action but when it comes down to it they do very little indeed.”
Loans that are being given for home purchases are actually at the highest rate in two years and the number of people being approved for mortgages is increasing. This is largely down to the fact that lending conditions have loosened and the amount needed for a deposit has dropped.
There has also been an increase in the number of mortgages because more people are buying homes to let them out. Many landlords are taking advantage of this and enjoying the increased support they are seeing from lenders.
David Hollingworth is a mortgage broker and he has said, “There does seem to be some amount of movement in the rates of mortgages but I think it’ll be quite some time before we see any significant increases. People still find the fixed-rate mortgage very appealing because it means they don’t have to deal with a budget that fluctuates each month. Also, because of the low rates right now they are popular.”