The mortgage market has got a breathing space after the Bank of England monetary policy committee voted to hold base rates at 5.25 per cent last week.
Many commentators say the decision is only putting off an inevitable rise as inflationary pressures are still in place.
The market had been hoping to avoid another rise in February following January’s 25 basis points’ increase when some lenders ran out of funds as borrowers rushed to secure fixed deals.
Alliance & Leicester head of intermediary mortgages Mehrdad Yousefi says: “Many market analysts will view this latest decision by the Bank of England as a mere delay of an inevitable further rate rise. Inflationary pressures on the economy remain strong, including some above-inflation pay deals, and they will play a key part in future base rate decisions.
“It is very likely that we will see another rate rise in the first half of this year, so it is crucial that borrowers assess what impact any possible future base rate rises could have on their finances.”
John Charcol senior technical director Ray Boulger says: “There are already some early signs of a slowdown in the rate of increase in house prices and last month’s shock rate rise, coupled with talk of another increase, is putting further pressure on prospective purchasers.
“We noticed a much higher proportion of clients asking for a fixed-rate mortgage after last month’s rise than after either of the previous increases, no doubt partly due to the shock tactics. The housing market does not need a further increase to slow it down.”