Eurozone crisis leads lenders to pull their mortgage rate best deals

Mortgage rate best deals previously offered by lenders, will disappear as a mortgage rate rise looks increasingly likely in 2012. Brokers have warned that home-owners will face an increase in mortgage costs as lenders respond to the eurozone crisis by raising their loan rates.

This month the Bank of England has yet again kept interest rates at 0.5 per cent and yet the costs of trackers and fixed rate mortgages are edging up. Many mortgage rate best deals are disappearing as growing pressures affect lenders margins, experts believe that mortgage rates will continue to rise in the coming months.

Fears of a potential increase in loan defaults has driven up the costs of lending between banks, the Libor which is used to set fixed rate mortgage costs, has risen squeezing lender margins. A spokesman for the Council of Mortgage Lenders has said that the knock on effect from the eurozone crisis is increased costs and reduced availability of funding. He added that so far competition between lenders has stopped these pressures being passed on to borrowers but it is a fine balance and only a matter of time.

The Bank of England has predicted a fresh tightening of lending criteria in 2012 which will make it harder for some home-owners to secure a mortgage. Higher wholesale costs and revised expectations over household incomes, means lenders are reducing credit availability. Home-owners with fixed rate mortgages now up for renewal, are likely to be moved onto more expensive standard variable rates as many mortgage rate best deals are pulled by lenders. For those coming to the end of their fixed term now may be a good time to look around at remortgage deals before the cheapest rates disappear.