Concerns over the Bank of England raising the base rate from the historic low of 0.5% are affecting home loans in a big way. Fixed rate home loans have reached a high point not seen in over twelve months. As speculation mounts regarding the increase, banks are using the rhetoric to their competitive advantage.

The bad news for some home owners is that they could be looking at a 10 month high of almost 4.6% on a two year fixed rate mortgage. Although, the effect is in the opposite direction for a variable deal holder which tracks the interest rate.

The average tracker has fallen to less than 3.5%, or a figure which has not been seen since the late 1980's. This data has been compiled by the financial group Moneyfacts.

The Mortgage Advice Bureau’s, Brian Murphy, commented on the possible rate rise and the responses lenders have had, saying: "It's no surprise trackers are cheap given the very real threat of a rate rise in the months ahead. Fixed rates have risen as a result of rises in the cost of wholesale lending. Lenders are passing on some of these rises in the form of higher fixed-rate deals."

The director of Obligo, Chris Gardner, contributed more regarding those taking advantage of the ability to remortgage, saying: "More and more people are beginning to re-mortgage off their lenders' standard variable rates. They believe a rate rise is coming fast and are running for cover. But unless you have a fair amount of equity and a spotless credit history you'll pay for the privilege.

"Many people desperately want to re-mortgage into repayment security but can't because they have insufficient equity or have perhaps lost their jobs.

"For them, the interest rate decision each month can be nerve-racking."

Moneyfacts website spokeswoman, Michelle Slade, commented additionally, saying: "Some borrowers have taken a ‘wait and see' approach over the last two years, preferring to remain on a lender's standard variable rate rather than move to a more expensive mortgage deal.

"However, talk of an imminent base rate rise has caused a surge in the demand for new mortgage deals.

"Borrowers looking for a fixed-rate mortgage need to act fast as deals are only in the market for an average of two weeks."