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Have Mortgage Rates Peaked?

News that Halifax and Bank of Scotland, part of the HBOS group, have cut their mortgage rates for new customers by 0.3% and 0.45% respectively has been well received by the markets. This comes on the back of a similar move by Northern Rock and rumours of further cuts to come in the sector. The combined moves of late, which have seen the HBOS group reduce rates 3 times in June alone, has prompted many to ask if mortgage rates have peaked and the trend is now down?

There is no doubt that the mortgage market is very much in need of a period of falling rates in order to try and stimulate demand in the battered housing sector, but whether rates have peaked yet is debateable. The rate cuts being announced are for new customers with many older clients still stuck at higher rates for the immediate future and more and more struggling to cover their payments.

There is no doubt that the next few months will see a substantial increase in repossessions which will weigh down on any possible housing market recovery for some time. We are also seeing more and more home owners pushed into the negative equity trap which will see plans to move up the property ladder put on hold or scrapped altogether.

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