Experts predict that mortgage rates will be set to rise again now that the US investment bank Lehman Brother’s has gone bankrupt, which will be a turn of events after the recent decreases in the last few weeks.

The market was just starting to recover slightly in terms of interest rates but now has been rocked again.  This means that the cost of lending money between banks, known as borrowing money on the wholesale market, has increased because of the higher risk, and this increase in cost will be passed onto borrowers.

Louise Cuming, head of mortgages at, the comparison website, said: “Since the collapse of Lehman Brothers we have already seen a huge jump in the Libor [the interest rate at which banks lend to each other] from 5.5 per cent to 6.8 per cent, and I fear that we will soon see lenders raising mortgage rates as a result. We may also see further tightening of already very demanding lending criteria.”

This is not great news for borrowers, and it is now even more important that they make sure that they are getting the best interest rate and the best mortgage deal for their own personal circumstances, something which will require advice from a qualified mortgage advisor.

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