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Rate freeze fails to calm mortgages |
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Holding interest rates at 5 per cent has failed to stop mortgage costs climbing, it emerged today. One of the bigest lenders, Alliance & Leicester, today raised interest on a two-year fixed-rate mortgage by 0.75 percentage points to 6.49 per cent, increasing the cost of a typical mortgage by nearly £900 a year. A bank spokesman said: "Changes are designed to meet our business requirements. They reflect moves by competitors in a fast-moving mortgage market."
The move came as two City banks warned the housing market is in the grips of recession. Michael Saunders, an ecconomist at Citigroup, said: "Something like what the US is experiencing in terms of a serious housing crash is now underway." And a Dresdner Kleinwort report predicted that, on a typical £158,000 mortgage mounthly repayments will rise from £993 to £1,065. To add to the depression, new Ministry of Justice figures were expected rising numbers of properties being reposessed. In February, figures had risen by up to 119 per-cent in some parts of the country. |
