Inflation forecast hits cheaper loans
Hopes of imminent cuts in new mortgage rates were dashed yesterday as the Bank of England’s inflation judgment sent money market interest rates soaring for a second successive day.
Three-month sterling Libor, the benchmark rate used to price many loans, soared by 0.04 percentage points to 5.84 per cent, bringing the rise to 0.08 percentage points in just two days and wiping out most of the improvement of the previous three weeks.
Homebuyers and borrowers looking to remortgage were warned to brace themselves for a worsening of mortgage terms because of the sea change in expectations about base rate over the next year. The average rate for a two-year loan reached 6.64 per cent yesterday – the highest rate since 2000, according to Moneyfacts.
’sale and rent back’ probed by Office of Fair Trading
The Office of Fair Trading (OFT) is to study whether people facing repossession are adequately protected in so-called “mortgage rescue” schemes.
Householders in difficulty are offered a quick sale of their home at a discount by buy-to-let investors and in return become a tenant in the house.
Consumer groups have called for regulation of these schemes, also called “sale and rent back”.
The OFT is aiming to report on the industry by September.