Funding crisis could to lead to higher mortgage rates.

High street lenders humiliated by a credit downgrade may increase their mortgage rates to cover rising costs.

The mortgage industry is once again facing increasing borrowing costs as HSBC, Royal Bank of Scotland, Barclays and Lloyds Banking Group have had their credit scores slashed due to the threat of a eurozone collapse.

Those banks who have suffered a downgrade could end up paying billions of pounds more to raise funds which could lead to their pushing up mortgage rates.

It light of the increases lenders are expected to pass on the extra costs to customers. 

Various lenders including the Halifax have already hiked their rates to cover funding increases and now cash strapped families could be hit by further mortgage rate rises which could mean misery for tens of thousands of households.

Increased funding costs will squeeze UK banks further which will hinder economic recovery.

As well as a mortgage rates hike, small businesses are likely to be impacted as their loan rates could well increase too.

The hope is the funding for lender initiative which will release over £100 billion in cheap funding to lenders should counter act any negative effect the downgrading may have.

Mortgage rates could therefore stabilise however lenders could well tighten their criteria again and restrict further who they are prepared to lend to.

If you are looking for competitive mortgage rates you should contact Deal Direct today while cheap deals remain on offer. We have access to deals not advertised on line, for details of lenders special offers call one of our skilled advisers today.

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