| Interest rates in the UK have continued to rise over the | | | | shop around if your current deal expires. Despite the |
| last few months despite the Bank of England base | | | | fact that the majority of people bank with one of the |
| rate remaining stable. Recent reports show that the | | | | big four high street banks, the bigger high street banks |
| cost to lenders for mortgages is continuing to go up, | | | | are now offering some of the worse deals on the |
| with lenders increasing rates as recently as the last | | | | markets in comparison to the smaller building societies |
| few days. | | | | and independent banks. Shopping around could help |
| Fixed rate mortgages have increased the most with | | | | find a deal which more closely mirrors the bank of |
| very few deals being offered close to the base rate | | | | England base rate and therefore represents a better |
| of five percent. The main drive behind these increases | | | | deal. In addition homeowners could consider an offset |
| is the global credit crunch which has seen many banks | | | | mortgage which offsets the interest paid on savings |
| and financial lenders struggling to recoup the money | | | | against the interest to be paid on a mortgage. This |
| they have lost. | | | | type of arrangement has become more popular as |
| When the global credit crunch first occurred, it was | | | | people find these deals can reduce their overall |
| those people who fitted the sub-prime lending | | | | outgoings. |
| category who were struggling. Mortgages were lent to | | | | The good news through all of the doom and gloom is |
| people who did not have the proper means to repay | | | | that interest rates on savings are now the highest they |
| them should there be any increases in interest rates. | | | | have been for years. Banks are trying to entice people |
| Now it seems everybody is suffering as banks try to | | | | to save to offset the cost of them having to borrow |
| make the regain some of the profits they were once | | | | money themselves. For the banks, the more |
| used to by increasing interest rates for those who can | | | | customers they have depositing money in savings |
| afford their mortgages. Research has shown that the | | | | accounts the less money they need to borrow from |
| average ninety percent loan to value mortgage now | | | | financial markets. Offering offset mortgages |
| costs 6.75% in interest, which is a two percent | | | | encourages customers to deposit their savings for a |
| increase on deals being offered two years ago. Fixed | | | | longer period as they are offsetting the amount of |
| rate mortgages have increased in popularity over | | | | interest on their mortgage. Whilst these types of deals |
| recent months as homeowners try to negate the | | | | are fairly new homeowners should not discount them |
| possibility of increased interest rate rises. However | | | | out of hand and seek professional advice as to |
| lenders said they have to put up the interest rates on | | | | whether they could be a suitable alternative for them |
| these types of deals due to the amount they are | | | | instead of traditional fixed rate or variable loan. Whilst |
| being charged to borrow the money themselves. | | | | interest rates for saving remain high this types of deals |
| There does not seem to be a huge amount which can | | | | could benefit both the banks and their customers. |
| be done to negate the rise in interest rates, except | | | | |