Mortgage rates rise as lenders pass on their costs to shore up finances.

UK lenders declining profit margins have led to an increase in mortgage rates.

The cost of home loans has increased. Lenders advise the eurozone crisis has pushed up funding costs which say they are no longer prepared to absorb. Increased costs are therefore being passed onto home-owners, many of whom are already financially stretched.

Some UK lenders have also increased their mortgage rates so that they are not left as the only one offering the most competitive deals. Those left offering cheap rates have found themselves inundated with applications unable to cope with demand. Rates are therefore being used to control lenders mortgage books.

According to Moneyfacts the average 2 year fixed rate is 4.49% which is its highest level since August last year. Just 5 months ago the average rate was 4.10% which meant repayments were £33 per month lower. With rate uncertainty many are choosing the safety of a fixed rate product. 

UK mortgage providers defend rate increases advising that up to the second quarter of this year they managed to absorb the increased costs. However they say that now a tipping point has now been reached and they just cannot afford to sustain cheap lending any longer.

Concern over the eurozone crisis, increased funding costs and the poor state of UK finances mean rates have had to increase, and once one high street lender increase rates others soon follow suit.

If you are looking for cheap mortgage rates you should contact Deal Direct for a mortgage review. Rates are going up and cheap deals may not be around much longer.

Deal Direct will compare the entire UK mortgage market to find a competitive offer for you.