Mortgage experts have warned that interest rates could surge now the Bank of England has refocused the Funding for Lending Scheme (FLS).
Experts do not think that volume lending will suffer as a result of the change, but they have expressed concern that interest rates could increase as much as 0.75 per cent, according to Money Marketing.
The FLS was expected to continue until January 2015, but the Bank has stopped cheap funding being made available to banks for mortgage lending from February 2014. This is because the housing market has been revitalised recently, and the Bank does not want a housing bubble to emerge.
Mehrdad Yousefi, an industry consultant, says: “The market has momentum now throughout the UK…but it is possible mortgage rates could go up by as much as 0.75 per cent over the next three or four months.”
Ray Boulger, at mortgage advisor John Charcol, said: “It is at least two or three months away before we start to see any rise in rates at the earliest, unless the market moves on when it thinks the Bank rate is going to rise.”
Since its launch in August 2012, FLS has been the key factor in creating some of the lowest mortgage rates ever seen in the UK.
