David Prosser: Interest rate rises ahead?

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The Independent Online

Outlook Here's a worrying straw in the wind, at least if you're a mortgage borrower. Although the Bank of England's base rate has been stuck at 0.5 per cent since April, a clutch of lenders have in recent weeks raised their standard variable rates (the interest rates borrowers pay if they are not on a short-term fixed or tracker deal).

The lenders concerned are all small, but Moneyfacts, the personal finance analyst, believes the trend may soon take hold across the rest of the mortgage market. Banks and building societies, it warns, have been competing for savers' business, and raising the cost of mortgage borrowing is the only way to pay for that.

Once, mortgage borrowers continually switched between short-term deals, so SVRs weren't important, but with base rates so low, increasing numbers are now better off on these rates than they would be by remortgaging.

However, if SVRs are on the increase, the dynamic in the mortgage market may be about to change once again. And even without a Bank of England base rate rise – the betting is still that there will be no increase until the end of the year – higher home loan costs may be yet another threat to consumers' disposable income.

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