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Interest rates good news for borrowers?

People considering taking out a home loan in the new year may be interested to read that one financial institution claims that it is "not all doom and gloom" in light of the ongoing credit crunch.

Leeds Building Society has stated that the Bank of England's decision to maintain the base interest rate of 5.5 per cent may actually minimise the "payment shock" of those mortgage holders coming to the end of their fixed-rate deals.

Most people have a fixed-rate mortgage, the building society claims, meaning that any change in the interest rate would not affect their borrowings.

New borrowers may also benefit from the current financial climate, according to Gary Brook, spokesperson for Leeds Building Society.

"New borrowers, and those remortgaging, are already benefiting from cheaper fixed rate mortgage products as swap rates, which are currently around 0.55 per cent lower than this time last year, have already factored in potential decreases in base rate," he said.

People coming out of their fixed-rate mortgages in the new year, however, may struggle to find extra cash, according to the Consumer Credit Counselling Service.

See how much you could borrow with a Lombard Direct Loan.

© Adfero Ltd

14/01/2008 14:50:28

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