Inflation and UK Mortgage Interest Rates

Feeding back about the recent UK inflation announcement rising to 3.1% way above the Governments target of 2% and how this is now affecting the mortgage market.

It’s been reported that mortgage lenders have been withdrawing their fixed rate deals prompting a surge in demand from mortgage borrowers, the the sudden rush to fix mortgage payments has used up all the available funding for these products.

Alliance & Leicester heave even pulled its whole range of fixed rates, citing “unprecedented demand”. Its also been reported that larger mortgage lenders such as the Northern Rock and Portman are now closely watching their fixed rate product rangesThese market conditions don’t sit well for the buy to let mortgage customer who really needs the security of a fixed rate mortgage especially if their portfolio is highly-geared.

Clearly the mortgage lending market is taking a very close look at their fixed rate exposure. This news of possible rate rises and the reduction of fixed rate availability is going to have a real impact on an already struggling first time buyer market.