Cheap fixed rate mortgages disappearing

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Cheap fixed rate mortgages disappearing

Tue 16th Jan 2007

A number of leading mortgage lenders are withdrawing their fixed-rate offers from the market as speculation mounts that a further hike in interest rates could be around the corner.

According to the financial information website Moneyfacts.co.uk, 12 banks and building societies have scrapped their fixed-rate deals since the Bank of England upped interest rates last week.

Rates were raised from 4.75 per cent to five per cent in November 2006. This was followed by a further hike this month to 5.25 per cent. And experts are predicting a third increase in the near future as inflation hits three per cent.

As a result of these rises many homebuyers are scrambling to take out mortgages that are fixed below five per cent in order to protect themselves against further hikes in the base rate.

But as demand for these now cheap fixed rate mortgage deals rises, mortgage lenders are being forced to take them off the market and replace them with more expensive ones.

"It's not really the end of fixed-rate mortgages as perhaps the headlines would suggest, just the end of cheap fixed-rate mortgages," Hank Potts of Barclays Private Clients told the BBC.

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