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Private Finance urges borrowers to look at swap rates
Mortgage Solutions | 08 Feb 2010 | 10:37
Private Finance has advised brokers to tell their clients to ignore the Bank Base Rate (BBR) and look at longer term swap rates when making decisions.
As the official BBR holds steady at 0.5% for the eleventh consecutive month, there has been discussion about potentially significant and rapid increases in interest rates on the back of rising inflation.
However, Private Finance has said buyers should not be discouraged from buying a property, just because a historically low BBR is likely to increase in the short term. The broker has urged homebuyers to base their affordability decisions on long term swap rates.
Simon Checkley, managing director of Private Finance, said: "If a mortgage based on these longer term rates can be afforded then we see no reason why a buyer should be put off a property purchase just because there is talk of increases in inflation and interest rates."
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Recent comments
You would always look at possible rate hikes in discusions, we already quote long term fixed rates, does the same job :-)
Smudger
08 Feb 2010 | 11:30
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The advice we give is to always look at affordability and budget and then look at what rates are available to each borrower. Swap rates only affect the BASE interest rate applicable to a lending facility. They dont necessarily reflect the rates at which lenders offer rates - it's not a 'one size fits all' rule. Overall mortgage costs, Lender criteria, product availablity, the borrowers ST, Med and LT plans, as well as client affordability and risk profile should be the ONLY things that are relevant in clients making a decision on choice of mortgage - and every individual is different. BBR will of course go up in time, but no one knows by how much, when and for how long - just make sure you discuss rising rates with your clients (unless they have opted for a long Fixed rate of 5 yrs or more - then they know that they dont have to worry about rising rates durin the fixed rate).
Avenue & Co Private Finance
08 Feb 2010 | 12:24
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