The Council of Mortgage Lenders has warned borrowers on tracker products that interest rates are expected to rise further.
Michael Coogan, director general of the CML, says: “The timing of this rise is sooner than we expected, although we have been forecasting higher rates.
Inflationary pressure appears to be more pronounced, not least because of the prospect of higher wage growth, and we would not be surprised if rates now ended 2007 at 5.5% rather than the 5.25% we forecast back in December.
“Mortgage borrowers who are concerned about the impact on affordability can still consider a wide range of attractive fixed-rate deals.
Anyone borrowing on a variable-rate basis should factor in an expectation that rates have further to rise.”