Brokers are predicting that the Eurozone crisis may lead to a rise in UK mortgage rates.
Libor (the London Investment Offered Rate), which is the short-term investment rate at which banks lend to one another, has recently increased, and mortgage rates could follow, a sign that banks are now less confident about inter-bank lending.
Lenders such as Santander and Halifax are raising their tracker rate, while average rates have altered little since the summer. Certain lenders draw mostly on their customers’ savings to fund mortgages, while others borrow large amounts on the money markets, which highlights the importance of Libor.
Fears are growing that an already weakened housing market will be affected further as the Euro crisis worsens, with a decrease in the supply of UK mortgages.
Eurozone to Impact on UK Mortgage Supply - BBC News