Are uk mortgage rates set to rise ?

There are warnings from mortgage experts that uk mortgage rates may be set to rise and that many borrowers could see their mortgage repayments increase.

Recently some lenders announced that they were lifting the cap on their standard variable rate products. The Halifax is one of these lenders that has announced that it is raising the cap on its standard variable rate (SVR) to 3.75 per cent above the Bank of England base rate which equates to 4.25 per cent.

The change to the cap appears to have been brought about by the increases in the cost of funding. Many mortgage customers who have been given this information will be understandably concerned and disappointed if they are due to come to the end of their current deal and revert to the lenders SVR.

As uk mortgage rates have been historically low for some time now it could benefit borrowers to swap to a more competitive deal if their lender has adopted this policy.

If uk mortgage rates do rise in next few months borrowers who have now gone onto their lenders SVR will be looking to remortgage to secure a better deal. Some lenders have launched droplock mortgages that may benefit borrowers with a low rate tracker that then switches to fixed rate later on.

The Woolwich has a five-year tracker-to-fix mortgage that tracks the base rate plus 2.99 per cent for the first two years which equals a rate of 3.49 per cent currently. For the next three years the mortgage then switches to a fixed rate of 4.29 per cent and comes with an arrangement fee of £1,299.

This type of deal can offer borrowers the best of both worlds with a low rate at the start of the mortgage term and then the security of a fixed rate at the end of the term.