The End of Fixed Rate Mortgages

Mortgage companies have taken out many of its leading fixed-rate deals from the market. This move will not allow homebuyers to protect themselves against further interest rate rises.

Since the Bank of England upped the base rate last week by 0.25 percent, 12 banks and building societies have withdrawn either selected fixed-rate deals, or their entire fixed- rate range.

Fixed deals are popular with mortgagors seeking to 'lock in' low rates for a set period of time, usually for two, three or five years.

Mortgage Analyst at Moneyfacts.co.uk, Julia Harris, comments on the lenders' decision to pull fixed-rate mortgages from the market: "Has there been a flurry of customers snapping up these 'cheap' deals, causing the societies to exhaust their trenches of fixed- rate funds? Or could it be an opportunity to re-price, allowing a larger profit margin?"

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

Harris also indicated that 'cheap' deals with short term fixed-rates fewer than 5 percent could very well disappear from the market in the coming months. Alternatively, lenders may pass the cost on to costumers though higher product fees.

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