Mortgage costs continue to rise

Posted 2008-03-19

The cost of borrowing for a home purchase has continued to rise in spite of recent interest rate cuts, John Charcol has claimed. Though the Bank of Englands benchmark rate of borrowing has fallen by 50 base points in the last four months, the mortgage broker said UK money markets continue to suffer. Yesterdays £5 billion injection into the markets was promptly oversubscribed fivefold and analysts say that pressure is trickling down in the mortgage industry. "Mondays turmoil on the stock market following a budget with disappointing provision for homeowners or first-time buyers - in a climate where precious few remaining lenders can accommodate high risk mortgages such as those with no deposit, bad credit, or new build properties - is a worry for many," said Katie Tucker, of John Charcol. She raised the prospect of newcomers to the property market finding themselves bogged down by negative equity and said that first-time buyers would be well advised to postpone their home purchase. Capital Economics today warned that the UK is now facing a worse house price crash than in the US.

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