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Small mortgage rate changes could have big effect, says expert

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Relatively small mortgage rate increases could significantly impact on the finances of mortgage holders, according to one analyst.

Rachel McKay, mortgage analyst at financial website Moneyfacts, says that mortgage holders should not underestimate the effect that higher mortgage rates might have on their pockets.

Over the past few months we have seen many lenders tweaking their fixed-rate two- and three-year ranges, mostly with minor rate increases of 0.1 per cent, Ms McKay notes.

However, over the last week our researchers have seen several lenders step up a gear, increasing rates on three year deals by up to 0.31 per cent.

Ms McKay says that although these mortgage rate changes are relatively small, they can still dent the finances of mortgage holders.

She advises those who are trying to find a mortgage to consider their future plans, work prospects, current financial situation and family plans when shopping around for the best mortgage deal .

In the current market consumers have a vast choice of many competitive rates, often with the ability to trade off upfront costs such as arrangement fees with higher rates, Ms McKay points out.

And with the negligible margin between fixed and discounted deals, consumers should be able to find a competitive deal which suits their current financial circumstances as well as matching their future plans.

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