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Top fixed-rate mortgages withdrawn
Thursday January 20th 2011
Mortgage providers have begun withdrawing their cheapest fixed-rate deals as fears grow that interest rates will have to rise earlier than expected because of soaring inflation.
Lenders including Lloyds TSB and Cheltenham & Gloucester, Halifax, Northern Rock, Skipton Building Society and the Co-operative Bank and Britannia have hiked rates this week, some by up to 0.7%.
First direct has withdrawn its two-year and five-year fixed-rate products, which were topping the best buy tables.
The move has been driven by a sharp rise in swap rates, which banks use to price their fixed-rate deals, caused by speculation that the Bank of England's Monetary Policy Committee will increase rates sooner due to inflation concerns.
The two-year swap rate has climbed from 1.53% to 1.79% since the beginning of 2011, while the five-year rate has risen from 2,66% to 2.93%.
The Consumer Prices Index jumped more than expected last month, from 3.3% to 3.7%, to keep it well above the Bank's target of 2%, but despite the likelihood that rates will rise to keep inflation in check, they will still remain low in historic terms.
Copyright © Press Association 2011
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