Now's the time to review your mortgage, warns CML

Friday, 04 January 2008 12:00

Borrowers coming off fixed-rate mortgage deals are being urged to review their finances after yesterday's gloomy Bank of England credit forecast.

The Council of Mortgage Lenders (CML) has issued the advice following the bank's credit conditions survey which predicted the credit crunch would reduce mortgage availability further in 2008.

The report has strengthened the CML's belief there will be further interest rate cuts as we move through the first months of 2008. And it is urging people to start planning ahead if their fixed-rate mortgages are about to end.

The survey, said the CML, reinforced its own view that the market is set to slow this year. It said the bank also confirmed its own fears that supply-side funding constraints would lead to a huge reduction in consumer demand for lending.

The fact the bank, in its last credit conditions survey, did not predict the turbulence experienced in the last three months emphasised just how volatile the market has been, said the CML.

Further evidence of a rocky road ahead came also from reports in the survey that many lenders expected house price expectations to affect lending over the next three months.

Bob Pannell, CML's head of research, said the findings raised the likelihood of a further base rate cut.

He said: "This survey corroborates other evidence of worsening market sentiment. This may increase the chances of interest rate cuts sooner rather than later if inflation remains subdued.

"Borrowers should make a new year's resolution to review their finances and plan ahead if they are coming off fixed rate deals later this year."

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