Mis-sold Mortgage Claims > Mortgage News
Mortgage rates increase as inflation causes concern over base rate rises
Wed, 09 Feb 2011
The continued cost of funds available to mortgage lenders has seen an increase in mortgage interest rates being offered to borrowers both in the UK and in the United States. This trend demonstrates that the impact of the financial crisis continues on a global basis.

Recent months have seen an increase in fixed rates and continued caution towards lending, in particular to first-time buyers (FTB). The UK mortgage market is influenced by rising inflation and slow economic growth. This has fuelled fears of an earlier than predicted rise in the banks base rate by many experts who believe that the Bank of England may announce a rise in the next two months.

There have been many comparisons drawn over recent years with the mortgage market in the United States, where it was reported that the sub-prime lending sector was responsible for the financial crash in the UK.

The reverse economic conditions are seeing rate increases in the USA, where Jeffrey Lacker, President of the Federal Reserve Bank of Richmond said. "While the economy is improving and inflation is low, the growth is proceeding at a much slower pace than the country has seen in recessions of the past. This lag, is largely because this time housing is not driving the recovery."

With record levels of arrears now being reported in the UK, any continued upward tend or base rate increase would cause considerable further damage to the fragile mortgage market and house prices .
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