"Banks are pricing in the expectation that the base rate is going to start rising again – probably by the end of the year. The money market rates they have to pay have jumped by 0.5% this week and these fixed rate mortgage rises reflect that. The banks’ money market rates effectively anticipate movements in the Bank of England base rate – this week’s rise means that lenders think the Bank of England may be considering a base rate hike.  This in turn points to the fact that we’re just beginning to see light at the end of the recession tunnel. The Bank of England won’t start cranking up the base rate until we see genuine, sustained improvement in economic indicators. Though it means more expensive mortgages, it could be the first tentative sign that this is the bottom."

For further information please contact:

The Wriglesworth Consultancy, Sarah Davidson T. 0207 427 1400