As house prices in Brighton & Hove show increases of 280% over the past ten years, banks and building societies are withdrawing the fixed rate offers that have been a lifeline to may first time buyers struggling to get on the ladder.
As lending institutions factor in looming interest rate rises in the coming months their fixed rate deals have disappeared almost overnight. The Halifax, the largest lender in the UK, withdrew most of its two and three year deals yesterday and Alliance & Leicester, Portman, Skitpon, Newcastle and Kent reliance are all expected to follow.
There is also likely to be some suffering for home owners on variable rate mortgages as interest rates are predicted to rise to at least 5.75% and possibly 6% before year end. After three increases since August 2006, repayment costs on a typical £200,000 mortgage would increase by £125 per month if bank base rates reach 6%.
See earlier stories in Knowdlegebase on the likelihood of a UK Housing Bubble
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