Lenders are expecting a surge in demand for fixed-rate mortgages after inflation rose by the fastest rate on record last month.
Experts warned that the cost of borrowing could soon increase as the CPI measure of inflation jumped to 3.7% in December, up from 3.3% the previous month, the Times reports.
In fact the bond market traders are factoring in a June rate increase in their pricing, which is well ahead of the late autumn 2011 / early 2012 current predictions.
Borrowers looking to protect themselves against future interest rate rises have been urged to act quickly with banks and building societies expected to increase their prices on new deals.
A number of lenders, including Skipton Building Society and Northern Rock, have already increased the cost of fixed rate deals within the past week and others are expected to follow in the coming days.
One industry insider says: "Market-leading fixed rates are already being snapped up by borrowers fearful of an imminent rate rise and today's higher than expected inflation is only likely to increase demand. Those who would struggle to pay their mortgage if rates were to rise should consider a fixed rate sooner rather than later for peace of mind."
Savers have also been urged to shop around for the best rates, to avoid their funds being eroded by the impact of higher prices.
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