The potential for further increases in the base rate has triggered a record uptake of fixed rate home loans by first time buyers.
In January 2007, 85% of first time buyers took out a fixed rate deal - the highest percentage on record, according to the Council of Mortgage Lenders (CML).
Among house movers 70% took out a fixed rate deal.
The average interest rate of these home-loans was 5.27%, following the three rate rises since August 2006.
"Each month it seems that the prospect of another interest rate rise is balanced on a knife edge," said Michael Coogan, director general of the CML.
"More and more borrowers are protecting themselves against this risk and choosing the certainty of fixing their monthly mortgage payments," he added.
Such speculation is likely to further fuel the rising demand for fixed-rate deals on mortgages & remortgages, Michael Cooke of homeowner loans specialist
The Loan Helper comments "of course, homeowners often need to raise further funds from time to time, and for those who have already secured a fixed rate, a remortgage often does not make financial sense compared to a secured loan which often serves their needs much better by keeping that great fixed rate mortgage deal in place, yet still utilising available equity to secure a
low rate loan to provide the funds required."
Despite the higher cost of home-loans, house prices are still increasing around the UK.
The Communities and Local Government Department (DCLG) reported recently that house price inflation in January had gone up to 10.9%, pushing the cost of the average house up to 205,286.
However, there are some indications that the market may, eventually, cool off.
The Royal Institution of Chartered Surveyors (RICS) reported that last month new enquiries to estate agents from potential purchasers dropped for the 3rd month in a row.
"The interest rate rises have started to worry would-be buyers with many concerned that they will be unable to meet mortgage repayments," said Ian Perry, spokesman for Royal Institution of Chartered Surveyors.
"Affordability for many will continue to decrease in the coming months as the January rise, and further rises take effect."
