Mortgages and increase in Libor rates

Commenting on the implications for mortgages with the rise of Libor rates, Louise Cuming, head of mortgages at price comparison site moneysupermarket.com, said: "The ominous move of Libor rates, up in the past week by around 0.3 per cent, can only mean one thing; mortgage rate increases are on the way.

"Coupled with lenders' ever growing aversion to any and all risk, we can expect mortgage borrowing to become even scarcer in coming months. The increase in Libor rates has already seen GE Money pull and re-price its products with significant rises of between 0.8 per cent and 1.6 per cent.

"Once again the most vulnerable borrowers are hardest hit and this will continue to drive through to arrears and repossession figures for those who have over-borrowed at artificially low rates in the past. Change is needed to strengthen the mortgage market in the long run, but it is the people that are worst off who will suffer in the immediate future."