Home loan rates `set to rise`

11 June 2009

Other mortgage lenders may raise their interest rates, according to experts, after Nationwide raised the rates on its fixed-rate mortgages by as much as 0.86% this week.

The building society will increase interest rates on all its fixed-rate home loans with effect from Friday, according to The Telegraph. Some experts believe that this will encourage competitors to follow suit with rises of their own.

The rate rises come despite the Bank of England holding its base rate at an all-time low of 0.5% for the third consecutive month.

A loans and mortgages expert for Think Money said: "In the past year or so, many mortgage rates have moved quite closely in line with base rate cuts, while rates on some other forms of credit have been largely unaffected.

"Even though it looks like home loan rates are about to go up, they should still be quite low compared with what was on offer two or three years ago. Homebuyers can improve their chances of finding the best deals by speaking to an expert mortgage adviser beforehand."

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