UK Mortgages Set To Show A Rise
There is bad news for borrowers - economists are predicting mortgage rates will have to rise because of the effects of the US housing market crisis.
The news comes despite yesterday's Bank of England decision to keep the interest rate on hold this month.
Borrowers were hoping to escape the effects of the recent market turmoils but City experts say UK banks will need to put their borrowing rates up in order to recoup some of their losses.
Global markets have been on a rollercoaster ride in the past few months with UK markets hit over fears of their exposure to the US sub-prime mortgage markets.
The sub-prime market consists of borrowers who have a poor credit rating and therefore are lent money at a higher rate of interest.
That sector has seen a huge rise in defaults - making problems for banks in the US and possibly outside.
Stock markets around the world have been in a state because of uncertainty about how much money is involved - and therefore how much is at risk.
The difficulty is that no-one is quite certain because much of the debt was "packaged out" and no-one yet has a breakdown - the result is a credit squeeze.
That has raised the cost of borrowing between banks, meaning lending will become more expensive.
The Bank of England has itself accepted that the situation needs to be watched closely.
The BoE on Wednesday made its first intervention in the recent financial turmoil by offering to pump billions extra into the banking system to ease high short-term borrowing costs.
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