Expect higher rates, property owners told

Turmoil in financial markets is likely to have a direct impact on those taking up mortgages, it has been warned.

Independent mortgage broker Savills Private Finance has told borrowers to expect higher rates following the collapse of Lehman Brothers, the bailout of AIG and the purchase of HBOS.

These events, the company claims, have had an impact on confidence in the financial markets, making it less likely that institutions will lend to one another.

According to Melanie Biel, director of Savills, this climate will bring about an increase in the cost of borrowing for property buyers.

"We expect this to result in higher rates on new fixed-rate and tracker mortgages in coming days," she warned.

However, the Council of Mortgage Lenders claimed it is "futile" to make predictions amid the current market uncertainty.

The council did go as far as to suggest that housing market correction is unlikely to take place before 2010.