Fixed-rate mortgages 'to rise in cost'

Date:Thursday 11th June 2009
Author: Susanna Kavka

Fixed-rate mortgages provided by UK lenders are to rise in cost, it has been suggested.

According to mortgage broker John Charcol, a recent increase in swap rates will precipitate the change.

The firm's Ray Boulger said: "The scale of the increase was large enough to be the straw that breaks the camel's back and as a result I expect several lenders to increase the cost of at least some of their fixed-rate mortgages over the next few days."

He added that with the majority of borrowers currently opting for fixed-rate home loans, such rises could have a detrimental impact on the housing market.

Mr Boulger added that consumers who want to take out a fixed-rate mortgage should do so now so as to avoid the potential rate increases.

Recently, Mortgageforce revealed that fixed-rate products are becoming more popular among homeowners.

It said that 56 per cent of the fixed-rate deals it was involved in last month were for a term of three years or longer.