Abacus Daily Debt News

Lenders are increasing prices to discourage borrowing

Mortgage providers may be hiking the rates on fixed-rate deals to curb the amount they are lending, one expert has suggested.

Ray Boulger, senior technical manager at mortgage adviser John Charcol, said that a lack of funds could be influencing the behaviour of suppliers.

"The other factor that is influencing lender’s pricing policies is how much they want to lend and the increase [in interest rate on mortgages]," he said.

Raising prices is an obvious way of controlling the amount that is borrowed, Mr Charcol added.

He also remarked that consumers should be prepared to wait for rates to settle down before deciding on a fixed-rate agreement.

Activity in the mortgage borrowing market has continued to decline, according to the Bank of England’s June Trends in Lending report published on June 18th. This was likely due to a lowering in the levels of remortgaging activity.

Increases in the number of fixed-rate deals means that the overall rate on new mortgage lending has stayed around four per cent since the start of 2009.

By Francis Finch