Cost of borrowing could increase, says expert

Those struggling with debt could have more worries in the near future as one expert believes lenders are looking for ways to increase the cost of borrowing.

Paula John, editor at Your Mortgage, was commenting after Lloyds TSB and Cheltenham & Gloucester announced that their variable-rate mortgage has risen to 3.99 per cent.

Ms John suggested lenders are looking for “alternative ways to put up the cost of borrowing for those existing customers and their new customers alike”.

She believes this is due to many lenders expecting interest rates to “remain relatively low for the foreseeable future”.

The move by the banks follows similar action by some competitors, but the reversionary rate remains below the average of other major lenders of 4.42 per cent.

Figures recently release by the Council of Mortgage Lenders showed a 25 per cent increase in new mortgage approvals for March, compared to those of the month before.

By James Perkins