Thursday, 25 June 2009

The six percent mortgage

From today's Telegraph:

"The average cost of a two-year fixed-rate mortgage has broken through the 5pc barrier for the first time since January and could soon reach 6pc.

Lenders are now charging an average of 5.04pc to home owners who want to fix their repayments for two years, up from 4.92pc on Monday and 4.74pc at the beginning of last week.

The steep rise in the average rate seen in recent days has been driven by Nationwide's decision to increase the cost of some of its fixed-rate deals for the second time in two weeks."

Why are banks pushing up their fixed rates? Could it be that they expect the inflation rate to nudge northwards?


Josh said...

There will be seven percent behind that.

mike said...

1) Higher interest rates will push up Sterling. 2) Banks won't get funding without higher returns for their investors. I heard that 16K mortgages are being turned down each month due to funding problems.

Anonymous said...

I think the most obvious answer is that the banks have lost a lot of money and want it back.