Mortgage costs set to rise still further

The Bank of England may have kept the base rate of interest at 5.75 per cent for the second month in succession, but mortgage costs are set to rise further due to higher lending rates between banks, one advisor has suggested.

John Malone from PMS has said that such increases are "inevitable" as lenders react to sub-prime problems in America, according to CityWire.

While such problems have been cited as one reason why interest rates have remained on hold this month, they have nonetheless meant that the London Interbank Offer Rate (Libor) has risen to 6.88 per cent, well above the base rate itself.

"I know a number of our members have information programmes in place to prepare their customers for the possibility of higher borrowing costs," said Jim Cunningham from the Council of Mortgage Lenders, speaking to the news wire.

The comments come as Abbey raises its tracker mortgage rates due to the current trends in the market, with the lender advising that its competitors are likely to follow suit in the near future.


© Adfero Ltd