Rates causing confusion

Apr 8 2008 by Sue Scott, Evening Gazette

HOMEOWNERS in the Tees Valley are ‘confused’ over the direction of mortgage interest rates, according to new research.

Newcastle Building Society, which surveyed nearly 1,000 people including homeowners in Middlesbrough, Hartlepool and Darlington, said it raised concerns over the choices people were making as the mortgage market plunged into the one of the most turbulent periods in its history.

In just one week, the number of deals was slashed 13% as lenders pulled offers attracting too much business.

There are now 4,679 different home loans available, compared with 15,599 at the beginning of July last year.

Steven Marks, lending executive at the Society, advised homeowners to keep alert to mortgage movements - especially the 1.4m people who will come off low-rate fixed term mortgages this year.

“The direction of interest rates has perhaps never been more important or higher up the news agenda, so it is something of a surprise to see a degree of confusion about where they are going,” he said.

Last week, Internet and telephone bank First Direct withdrew its entire mortgage range from new customers, while the Co-operative Bank pulled all of its two-year deals.

But Peter Rowley, chief executive of Darlington Building Society, said reports that the mortgage market was imploding were over stated.

“While new or prospective borrowers may not have the same very extensive choice, it is misleading and alarmist to portray the mortgage market as difficult. For the credit worthy applicant able to contribute towards the purchase and demonstrate that the required advance is affordable, there is still a good choice of products available from a large number of mainstream lenders.“"added:”

But he conceded: " The funding costs of most financial firms have increased over the last six months and ultimately borrowers will have to come to terms with housing finance becoming more expensive than it has been in recent years."