Mortgage lenders raise tracker costs

Those wondering whether to buy or rent in London may have their minds made up in favour of the latter following news that two lenders are raising their tracker mortgage rates.

While the base rate has come down by 0.5 per cent this month, Woolwich and Lloyds TSB have both announced they are raising their tracker rates.

Barclays-owned Woolwich put its rates back up after briefly trimming them in the wake of the Bank of England rate cut, with head of mortgages Andy Gray stating: "We are seeing unsustainable flows of customers to Woolwich since changes by other lenders left us with some of the only competitively priced mortgages in the market."

For this reason, the lender had to curb the flow of new customers with the higher rate.

Lloyds TSB also said it was putting its rate up because its competitors were doing so.

These decisions mean those hoping to gain from falling interest rates in the mortgage market will now have less chance to do so.

Earlier this week Bank of England Monetary Policy Committee member (MPC) Andrew Sentance hinted that the MPC could find it easier to cut rates in the months ahead as inflation is expected to start falling quickly soon.