Click on the advert above to visit the company web site

Product category: Banking / credit / debt
News Release from: Alliance & Leicester | Subject: Mortgages
Edited by the Insidemoneytalk Editorial Team on 09 July 2007

Alliance and Leicester comments on
today's MPC decision to raise base rate
to 5.75%

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

"Today's rate rise in many ways was a done deal given continued concerns echoing from within the MPC over inflationary pressures In his recent Mansion House speech, Mervyn King reiterated that the committee was 'determined to bring inflation back to target and keep it there'

For many borrowers, that means having to manage larger monthly mortgage payments and ensuring they have sufficient available to stand a further increase to base rate.

"The markets have already priced in at least one, if not two, further rate rises over the coming 12 to 18 months, which suggests the Bank of England will continue to move rates higher in order to bring inflation back to target in the medium to long term, if required.

"We do, however, expect to see increased levels of remortgage activity during September and October, as many borrowers coming to the end of their current scheme either seek to re-fix or restructure their mortgage to ensure that they are better placed to deal with any further increase to base rate.

First-time buyers entering the market should continue to think seriously about a fixed-rate deal to ensure that they can get certainty around how much they need to pay each month on their mortgage.

"For those borrowers with greater financial flexibility, a base rate tracker mortgage still offers great value, as long as you are prepared to manage any potential increases in monthly payments.".

• Alliance & Leicester: contact details and other news
• Email this article to a colleague
• Insidemoneytalk Home Page

Search the Pro-Talk network of sites