Speedily increasing SWAP rates are likely to push base rates higher this year. This will affect people by making fixed rate products increasingly expensive and by making the rates uncompetitive.

The Woolwich group have recommended mortgages and said that tracker mortgages are now likely to offer the best value for borrowers.

Darren Cook, head of mortgages at financial information website Moneyfacts.co.uk said that the interest rates on two-year fixed rate loans had risen by around 0.1%, while the rates on ones for five-plus years were around 0.2% higher. He alleged that SWAP rates had risen during the past couple of weeks and this in turn was increasing the cost of fixed rate mortgages.

Borrowing costs will get higher in future as the Bank of England quarterly inflation report revealed it documented that the market was expecting a quarter-point increase in interest rates to 4.75% over the next 12 months.

The Bank of England also forecasted that inflation would hit its 2% target in the next couple of years.

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