The amount of money banks and building societies are willing to lend to home owners is being based on future interest rate rises for the first time, it can be disclosed.
Lenders are so concerned about the likelihood that rates will rise they have placed extra restrictions on borrowers. If the Bank of England raises interest rates from 0.5 per cent, which many analysts predict, lenders are likely to follow suit with their standard variable rates – the rate which borrowers automatically slip onto at the end of their initial deal.
Despite an average two year fixed rate mortgage being 4.75 per cent, some high street lenders are basing their affordability calculations on almost double this amount.
Source – Daily Telegraph
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Justin Moy