Mortgage rates will increase

Date:Wednesday 24th September 2008

Homeowners reaching the end of a fixed-rate mortgage deal have been urged by financial website to apply for a new one immediately.

This is because the website believes mortgage rates are going to increase. said that it took six months for the interest rates for banks borrowing from each other to go from six per cent to 5.7 per cent.

But after the recent turmoil in the financial markets, the London Interbank Offered Rate (Libor) has gone back above six per cent in just four days. predicts that rates will rise within days as a result.

David Kuo, head of personal finance at, said Libor is a better guide to mortgage rates than the Bank of England base rate.

"Unless suitable arrangements are made soon, homeowners may find that any attractive deals currently available could be withdrawn," he warned.

Another finance website, Moneyfacts, has warned that borrowers with a deposit of ten per cent or less have fewer mortgages available to them.

It said the number of products open to people with such small deposits had dropped by 45 per cent in a year.