Goodbye to fixed rates

Many lenders are rushing to take fixed rate mortgage deals off the market after last week’s surprise bank rate hike.

As many as 12 lenders have suspended popular fixed-rate mortgages already. Some are withdrawing their entire range.

The snap action by lenders will deny borrowers who do not act quickly the chance to avoid any further increase in interest rates. This month's decision caught the market unprepared.

Julia Harris, of Moneyfacts.co.uk said: "The shock announcement of last week’s base rate increase may have taken lenders by surprise, with most industry experts expecting the rise to occur in February or March."

"Some lenders, however, have been quick off the mark, with several already announcing increases to their SVRs (standard variable rates) and revised tracker rates.”

"With a further rate rise still on the cards for 2007, those consumers on a tight budget will need to act quickly before more of the current best buy fixed rate deals vanish," Ms Harris added.

Louise Cuming, head of mortgages at Moneysupermarket.com, said: “My advice, if you will not incur a penalty to switch mortgage products, is to shop around urgently, especially if you are paying the lender's standard variable rate of around seven per cent. In the first instance borrowers should approach their existing lender to see if they can transfer onto a more competitive rate.”