Mortgage Rates 'becoming more expensive'

 Fixed rate mortgages have become more expensive in recent months as the markets "overreact" to potential interest rate rises, brokers say.

The cost of borrowing for mortgage lenders - known as the swap rate - has risen, which has pushed up fixed-rate deal costs in recent months.
This swap rate has risen because of an expectation of UK interest rate rises later in the year.
The Bank of England has again frozen the Bank rate at 0.5%.
The rate has remained at this level since March 2009.

There are two key factors to the prices of home loans, according to Ray Boulger, of mortgage broker John Charcol.
The Bank rate - currently at a record low of 0.5% - dictates short-term costs of rates.
However, the swap rate is more significant for longer term fixed-rate mortgages as it is based on where interest rates are expected to move in the future, Mr Boulger says

There is widespread expectation of a Bank rate rise later in the year, and this is pushing up the cost of fixed-rate deals.

But Mr Boulger said that this rise in home loan costs might not last if it turns out that the markets have overstepped any forthcoming changes.
"If the Bank rate fever dies down a bit, the costs [of fixed-rate deals] could come down later in the year," he said.
Melanie Bien, of mortgage broker Private Finance, said that the markets had been "overreacting" to potential rate rises and this had been reflected in the growing costs of fixed-rate mortgages.
The movements of the swap rate were difficult for borrowers to understand when the Bank rate remained steady, she said.
But she stressed that there were still very competitive deals available, with some five-year fixed-rate deals starting at 4%.