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Lenders pulling fixed deals as rate fears hit home

Lenders have begun pulling their fixed rate deals amid speculation of another base rate rise in May.

Alliance & Leicester, Northern Rock and Portman have all pulled deals this year, while Halifax is expected to re-price shortly.

The moves come after inflation hit 3.1 per cent in March, with many economists expecting a rate rise from the current 5.25 per cent next month to help cool inflation.

Moneysupermarket.com head of mortgages Louise Cuming says: “It may seem like a rash decision to remove fixed rate deals from the market, but it probably would have happened anyway. Tuesday’s inflation announcement has simply brought it forward a few weeks.

“Fixed rates have to be the best advice for first-time buyers because many have to borrow to their upper limits. Now those fixed rate products have been withdrawn we can expect lenders will soon announce a raft of new deals with increased fixed rates. This will surely impact on first-time buyers and, in turn, the market. In light of this, people might also begin to think twice about moving. It’s hard to see how the market won’t come to a standstill.”

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