Base rate effect on mortgage rates minimal ñ for now

Despite initial fears of an immediate body-blow to affordability, the movement in mortgage market rates has been relatively slow since last weeks (weekís) base rate increase.

The most immediate bellwether of mortgage market movements, tracker deal rates, have yet to see any sign of change in around half of all offers available.

Changes to standard variable rates (SVR) have also been fairly slow with just 20 changes announced as of August 10th, with all but one following the base rate increase.

The exception, the One Account, has in addition to increasing its variable rate by 0.25 per cent has cut its previous discount on variable deals by 0.35 per cent.

This means that a two year deal with a maximum loan-value of 85 per cent has risen from 4.89 to 5.24 per cent, with a revert rate up from 5.45 to 5.89 per cent.

Elsewhere, Norwich and Peterborough Building Society has increased its rates by 0.44 per cent since mid-June, although this increase only makes them compare mortgage rates with the rest of the market.

“I’m sure their customers won’t see it that way, especially with the impact it will have on their pockets,” noted Andrew Hagger of Moneyfacts, however.

The sluggishness in the market seemed to indicate that the increase caught banks and building societies as off-guard as it did many consumers, he added.

© Adfero Ltd

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