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Mortgage rates have been historically low for a year now thanks to lender forbearance and a low base rate – but should people with adverse loans be concerned that mortgage rates are on their way up?

It's a tricky task to predict the exact point, or even a close estimate, of when rates may rise. However, with the current base rate at 0.50%, it is fair to assume the future for rates can only be up. 

HSBC is reminding borrowers that 20 years ago the Bank of England base rate was at 15.4%, proving that rates can rise significantly higher than 0.5%. It says that while no one is arguing that interest rates are likely to hit double figures anytime soon, some economists are estimating that Bank of England base rates could reach 6.5% over the next five years. 

Martijn van der Heijden, head of mortgages at HSBC says: "The message for borrowers is that if you couldn't afford an increase of up to 3% on your mortgage, you should seriously look to fix your payments now. Mortgage holders unsure of how they might be effected by rising interest rates over the next few years should first take expert financial advice."

A mortgage expert will not try to predict the future, but they will use their years of experience to help you come up with a solution that is likely to mean you pay out as little as possible over the coming years. No one can know what the future holds but you can prepare yourself with the help of someone who has seen it all before.

SOURCE: HSBC, 03/03/10

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