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The Bank of England base rate has not budged from its record low of 0.5 percent in two years. But news that the rate is due to increase in the latter part of this year would mean that mortgage borrowers would see an increase in their monthly mortgage repayments. This is causing concern to many as they struggle to keep up with rising prices of utilities, fuel and many other essential items.

Industry watchdog the Financial Services Authority (FSA), has published guidelines for mortgage affordability. It says, “a mortgage is affordable if its level and terms allow the consumer to meet current and future payment obligations in full, without recourse to further debt relief or rescheduling, avoiding accumulation of arrears while allowing an acceptable level of consumption”.

Recent figures from the Council of Mortgage Lenders (CML) suggest that an increase in interest rates could leave millions of households struggling to meet their mortgage repayments. It found that 2.9 million homeowners would breach the FSA’s published affordability guidelines if interest rates were to rise by 2 per cent.

This has caused many homeowners to look at remortgage deals in order to try to reduce their monthly outlay on mortgage repayments, as they continue to try and steer away from ‘tipping point’. With fuel prices now at just under 1.50 per litre, and energy costs skyrocketing, there appears to be no other option.

With interest rates set to rise, borrowers have been particularly interested in fixed rate remortgage deals. A fixed rate offers the security of fixed mortgage payments irrespective of upward moves in interest rates. However, borrowers who have considered a fixed rate remortgage deal have found that the rates available on such products have increased over the last few months.

Heightened anticipation of a hike in interest rates has led to a rapid shift in fixed rate mortgage pricing, says David Hollingworth, from London and Country, the mortgage broker. “Lender after lender has moved to increase its rates, often on more than one occasion.”

He added: “Borrowers hoping to access fixed deal to protect against rising rates will find that they’ve missed out on the lowest mortgage rates, although the products still look good in historical terms.”

Recent research showed that the average five year fixed rate remortgage deal is now at 5.66 per cent, compared to 5.33 per cent in January 2011. On an average £150,000 interest only mortgage this equates to an additional £41.25 per month, or nearly £2,500 over five years.

Owing to the massive increase in the popularity of remortgages, recently reported by the CML, it seems logical to assume that banks and building societies will continue to push up the rates of their fixed term deals in order to capitalise on the growth in demand.

The advice really is to ensure that you do your research before entering into a contract, and to obtain the best deal possible it is a good idea to use a mortgage brokers who can seek out deals that are not available on the high street.

Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.