While this lack of movement in rates and further QE is not surprising because of the weakness of the economy and the unresolved Eurozone crisis, there have been shocks elsewhere in the past few days with news of the Libor fixing scandal.
While few borrowers have a Libor-linked mortgage so the majority won't be directly affected by its pricing, there is an indirect link. When banks increase their spreads, they cite the reason as Libor; the cost of their own borrowing is more expensive so they have to pass this cost onto customers. The best way borrowers who are seeking a variable rate can protect themselves is to choose a mortgage which follows a centrally controlled index, such as base rate. This can't be manipulated by lenders.
Mortgages linked to a lender's standard variable rate (SVR) also lack transparency as lenders can raise these on a whim. Indeed, ING Direct announced this week that it is raising its SVR from 3.5 per cent to 3.99 per cent from 1st August. While this brings ING's SVR into line with many of its competitors, it's small comfort for the borrowers who are seeing a jump in their mortgage payments even though there is no move in base rate. It emphasises that any borrower on their lender's SVR needs to be vigilant and keep an eye on the rate, looking to remortgage if it edges upwards.
Computer glitches at NatWest, RBS and Ulster Bank, have left many wondering whether its time to switch their banking away from one of the large high-street banks to a mutual. It's not just on the savings front that mutuals are proving competitive: there are some excellent mortgage deals currently on offer from building societies, with SPF Private Clients having access to five-year fixed rates starting from as little as 3.69 per cent for those with a 25 per cent deposit or similar level of equity in their home. This is an excellent rate, providing peace of mind for a reasonable length of time.