Alliance and Leicester comments on today's CML lending figures

Stephen Leonard, Director of Mortgages at Alliance and Leicester, said:

"Today's CML mortgage lending figures show nearly a 12 per cent increase in lending for May, compared with April.

While this demonstrates continued strong levels of activity, it is as a result of purchasing and remortgaging that took place in February and March, when fixed rate mortgages were more than one per cent cheaper than they are today.

"These numbers are sustainable moving forward, but as increased borrowing costs start to be realised there will probably be a slight reduction in the level of purchasing and remortgaging activity during the second half of this year.

"With the markets indicating that another base rate rise is highly likely, borrowers would be advised to fix if taking a high loan to value mortgage to ensure that they have some certainty around their monthly payments.

However, if borrowers only require a low loan to value mortgage and have a good level of affordability there are some exceptionally good value discount and base rate tracker deals available that are priced at up to 0.65 per cent lower than the best fixed rates.

"With interest rates nearing the top of the curve, it is likely fixed rate deals will not be as dominant.

Brokers taking a longer-term view are likely to start recommending tracker rates over fixed rates to those borrowers who are financially flexible.".

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