Mortgage applicants have been warned against expecting the basic bank rate to remain at its current low level by an industry expert.
There is a real "danger" of customers beginning to take for granted the 0.5 per cent basic rate set by the Bank of England, according to Your Mortgage.
Paula John, editor at the mortgage website, pointed out that although the rate had been maintained at its all-time low level since March 2009, it was unlikely to remain so forever.
She said: "There is a danger that the longer we have this extremely low base rate environment, more people will start to think that this is the norm – which it isn't."
Ms John went on to say that house-hunters should not overlook the advantages of taking on fixed mortgage deals with rates of around five per cent.
Her comments follow in the wake of a recent piece of research published by Andrew Lilico, chief economist at Policy Exchange, which predicted that in the next two years interest rates could rise to as high as eight per cent in order to counter rising inflation levels.
Another recent report made public by Moneyfacts.co.uk revealed that despite the fall in interest rates, the average margin on a mortgage product fixed for two years had risen from 1.28 per cent to 3.29 per cent in the last two years.
This increase in margin resulted in the borrower having to pay back an additional £149 per month. Over the period of two years, this led to an extra £3,576 being shelled out by the customer.
Michelle Slade, spokesperson for Moneyfacts.co.uk, commented: "The mortgage rates on offer at present are typical of what borrowers expected to pay when bank base rate was higher."
However, earlier this week, Stuart Law, chief executive officer of Assetz, pointed out that mortgage lending provided by banks had improved over the last few months. |
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