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Lending rates increase amid expectation of upturn
A growing number of mortgage lenders have begun to increase their interest rates in response to growing optimism surrounding the economy, it has been claimed.
Independent mortgage advice company Alexander Hall has revealed that many lenders are looking to increase their interest rates because they expect to see the Bank of England up the base rate before the end of the year.
With several signs that the economy is beginning to pull out of recession, the central bank may be tempted to increase interest rates, confident that people will still be able to pay off homeowner loans and secured loans despite the recent economic turmoil.
Andy Pratt, chief operating officer at Alexander Hall, explained: "To a large degree [lenders] are actually pricing because they think there may be an interest rate change in the next month or the month after, so at least they can get ahead of the curve."
The Council of Mortgage Lenders has reported this month that 35,600 home loans were taken out in April 2009, which represents a 16 per cent increase compared to the previous month, although remains 28 per cent down on the same month last year.