Grab cheap mortgage rates now

Published: September 24, 2008

Over the last few weeks, the UK mortgage market has started to benefit from an increase in competition between lenders. Fixed rates in particular have seen a number of reductions as lenders have reacted to each other, and this has resulted in more options for those coming to the end of their current mortgage deal.

However, recent turmoil in the financial markets now looks likely to bring an end to any further improvements and may well push rates back up again. An early indication of this is an increase in the LIBOR rate, which is the rate at which banks lend money to each other. Having fallen to around 5.7%, this has now moved back up to 6%, and whilst LIBOR is not the sole influencer of fixed rate prices, many feel it is an indication of where things are going.

Tim Lee, Managing Director of The Mortgage Warehouse said: "It seems obvious that the recent reductions in fixed rate money may not last. Even this morning we have been contacted by First Active to tell us that the rate on their 90% two year fixed rate will increase from midnight.

"I would urge all those whose fixed rate deal is due to end in the next six months to secure a new rate now, before rates increase."