The increase has also opened up the debate as to whether borrowers should be opting for tracker or discount mortgages.
Simon Jones, Director at Savills Private Finance, commented:
‘’ This rise is the fourth quarter percent increase since November and we cannot rule out further movement before the end of the year. Those people who have had to stretch their mortgage to afford their property will need to be cautious, especially those on tracker and discount mortgages. Those borrowers who have opted for a tracker mortgage are aware from the outset that their mortgage will move with Base Rate, however those on discount mortgages take more of a risk. Although discount mortgages often represent excellent value, the drawback is that lenders have full discretion as to the rate at which they set their SVR. After last month’s rise, most lenders passed on the full 0.25%, however there were some lenders who increased their margins by as much as 0.45%. Considering that rising interest rates have already put a considerable strain on many borrowers, this is a rather unfair move and borrowers will feel rightly aggrieved.’’
Savills Private Finance currently has on offer through Halifax an exclusive tracker mortgage at 0.11% below Bank of England Base Rate until 31 October 2006. There are no penalties at any time and the rate is available to those moving home and also first time buyers.
