With the UK interest rates rising in the next several months, from what most economists believe, the probability of the capped rate mortgage or remortgage will once again become popular. The interest rates are set to start rising about middle of 2011, many experts predict.

The Bank of England left the base rate alone for the 18^th month in a row last week, even though the threat of rising inflation continues to mount. The Monetary Policy Committee (MPC) of the Bank of England determines the rate and is once again in the midst of the toughest policy choice in years. The possibility of the rise in inflation is weighed against putting the breaks on an already struggling economy. By raising the base rate and allowing less money to enter the economy, the chance for stalling the economic growth becomes greater.

So with the base rate remaining the same again for this month, the question must be asked; when will the rates start rising again? With the answer to this question being sooner better than later, lenders will be pushing a loan product called a capped rate loan. This product will be available for first time homeowners or as a remortgage tool.

The reason the capped rate mortgage or remortgage loan product will become popular again is, while interest rates are on the rise the product provides a cap, or maximum interest rate during the term of the loan. When the interest rate is capped, the monthly payment is only able to go up to a specific amount, and cannot go farther than that. This provides a great deal of protection for anyone who acquires a loan with rising interest rates in the near future.

Ben Wilkie, editor of What Mortgage said: "Following a rise in the country’s base rate, financiers may well decide to reintroduce capped mortgages in order to help attract people into the lending sector once again."

He also mentioned: "They were a popular deal so they certainly will have a place in the market."