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Base rate move takes industry by surprise

Last week’s increase in the base rate to 5.25 per cent is expected to spark more interest among borrowers to switch from variable deals to fixed rates.

The Bank of England monetary policy committee’s decision to impose a 25 basis point rise so early in the year took most of the industry by surprise as an increase was not expected until February.

The Council of Mortgage Lenders is predicting that rates could reach 5.5 per cent by the end of the year because of inflationary pressures and higher wage growth. It was the third increase in the base rate since last August.

Council of Mortgage Lenders director-general Michael Coogan says: “The timing of this rise is sooner than we expected although we have been forecasting higher rates.

“Mortgage borrowers who are concerned about the impact on affordability can still consider a wide range of attractive fixed-rate deals. Anyone borrowing on a variable-rate basis should factor in an expectation that rates have further to rise.”

GMAC-RFC director of marketing Jeff Knight says: “The industry has expected another rate rise for some time but I did not expect it to happen as early as January, so this has come as a slight surprise. I believe the market will see another rate rise later in the year to 5.5 per cent. It is difficult to see a rate rise higher than this in the next six months but I would not rule it out before a later reduction.”


Two key managers depart Pru

Prudential has lost two members of its senior management team to rivals Paternoster and Old Mutual.Chief operating officer Rosie Harris is joining Old Mutual, where she will replace John Deane as group head of risk and compliance.Harris has been at Prudential for 21 years and held key roles including risk management director and customer service […]

Cru sets up trio of Guernsey funds

Cru Investment Management, a Cardiff-based absolute-return investment firm, has set up three new Guernsey funds. The funds, will invest in private equity, private finance and sustainable opportunities.

Divorcees have £230k to split

The average divorcing couple has assets worth over £230,000, according to research from Money It says140,000 couples could get divorced during 2007 with £32.2 bn of assets to divide.

Assureweb switches on tracking service

Assureweb has launched its new business tracking service allowing advisers to see the status of all new business applications submitted to providers from registration until the policy goes live.

Japan: mid-year review and outlook

By Chris Taylor, Manager of the Neptune Japan Opportunities Fund H1 2014 Economy: after a harsh winter that slowed activity in the economy, the main event of the first half of the year has been the debate over what impact the 1 April VAT hike from five to eight per cent would have; we are […]


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