Mortgage lenders slow to react to rate rise
Posted: 11 Aug 2006 16:05:09 GMT
Mortgage lenders have been slow to react to the Bank of England's (BoE) rate rise decision and may have been caught on the hop, according to reports.
Research from Moneyfacts Group has suggested that the major banks and lenders were not prepared for the interest rate rise and so have been understandably slow in introducing rate increases.
So far only 20 lenders have introduced rate increases on standard variable rate mortgages, with all but one setting these increases in line with the new base rate. This leaves around 100 mortgage lenders yet to announce a rate change, including those banks that offer tracker loans.
Andrew Hagger from Moneyfacts stated: "We are surprised that reaction has been so slow, even 50 per cent of tracker mortgage changes are yet to be announced – this could be a sign that many banks and building societies were also caught on the hop by last week's announcement."
The rate increase signalled higher mortgage prices and more financial pressure on first-time buyers trying to get on the property ladder. This was compounded by reports yesterday that the BoE has hinted at a further rate hike in an effort to peg back inflation.
Interest rate rises can be seen as part of a global trend, with the US Fed and the Eurozone all implementing increases. But internationally the situation seems to be settling down as rates were left unchanged in the latest US and Japanese announcements.