Millions of homeowners could face shock mortgage bill rise this month – here’s how to avoid it
Banks and building societies will start paying back more than £100billion they've borrowed and that could be bad news for cheap mortgage deals
HOMEOWNERS could face a hike in their mortgage bills as a Government scheme comes to an end this month.
Banks and building societies have cheaply borrowed more than £100billion through the Term Funding Scheme (TFS) since it was launched 18 months ago.
It was designed to make sure that the Bank of England's interest rate cut of 0.25 per cent in August 2016 was passed onto borrowers in the wake of the EU referendum result.
The cash pot gave lenders access to cheap money and helped finance cheap mortgage deals - but all that is set to come to an end this month when the banks and building societies have to start paying the money back.
Its ending has sparked fears that millions of Brits could see rate rises if they're a first-time buyer or looking to remortgage when their current deal comes to an end.
And it could be even worse news for those on Standard Variable Rates (SVRs) deals, who could face a hike even sooner if their lender decides to up their rates.
It found that the average rate for a two year fixed deal is 2.35 per cent - up from a record low of 2.20 per cent in October - while the number of products available has also dropped to just over 4,500, down from a high of 4,815 just three months ago.
It might not be bad news for everyone though.
While mortgage rates rising might hit families in the pocket, it could mean savings rates could also rise.
As banks have been able to borrow cheaply, they've had no need to compete hard for savers' cash with attractive rates.
But experts think that the ending of TFS and another scheme called Funding For Lending, could see a boost to savings rates as bank try and attract new customers.
Savings expert Andrew Hagger said: "Banks will need to refocus their attention on retail savings to fund their lending activities.
"As a result we should start to see an improvement in savings rates although I think it will be a gradual recovery, after all the banks have four years in which to repay the £100 billion borrowed from the TFS."
The Bank of England will decide on Thursday whether to raise interest rates or not.
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