|
Monday 10th May 2010
Experts warn over mortgage rates
Mortgage rates should not rise significantly as a result of the uncertainty caused by the hung parliament, commentators have said.
Mortgage rates should not rise significantly as a result of the uncertainty caused by the hung parliament, commentators have said.
Lenders were slow to respond to the result of the General Election, instead continuing to sit on their hands as they waited to see who would form the next government.But despite steep slides to the FTSE 100 and value of the pound, as markets reacted to the uncertainty, there was only a slight rise in gilt yields, and swap rates - upon which fixed-rate mortgages are partially based - actually improved.
Gilt yields increased by only between four and nine basis-points, a change that is often seen during a normal day's trading.
And despite the fact that swap rates typically mirror changes to gilts, two-year swaps actual fell from 1.64% on Thursday to 1.6% on Friday, while five-year ones dropped by 0.05% to 2.84%.
There were also no reports of lenders pulling mortgage deals or raising their rates in response to the inconclusive election result.
Activity in the mortgage market has been subdued since the beginning of April as lenders waited for the outcome of Thursday's vote.
The average shelf life of a mortgage deal nearly doubled during the month to 30 days, while there were also 26% fewer product changes.
Ray Boulger, senior technical manager at John Charcol, said: "The movement (in gilt yields) is not sufficient to push mortgage rates up.
"As far as tracker rates are concerned, we still see no reason for the Bank of England to change rates in the short term."
Source: Press Association