We are looking around for a good mortgage deal at the moment however I am somewhat confused....  Can anyone tell me why some fixed rate mortgages have just increased when there has TODAY been a drop in interest rates ??? Seems bewildering to me. Should it not have been more likely the other way round ?

It stayed the same

http://news.bbc.co.uk/1/hi/business/7180758.stm

Ooooops....had a long shift that day and just caught the end of the news....I thought they said they have dropped....obviously I picked it up wrong. Oooooops.....Thanks for the info !

Some lenders will keep their fixed rates the same to maximise their profits & won't pass on any interest rate saving on.  This has also happended with people's loans that are linked to the base rate, banks dont have to pass on any saving.  It will also depend on how the individual bank or building society raises its cash (this is how Northern Rock's problems started) & how other areas of their company are doing As a mortgage advisor I know only too well what a turbulent time the FS industry is having, I wouldn't expect to see any major drops in fixed rates until early summer, maybe a bit earlier if the BOS do as anticipated drop rates in Feb & March.  My advice would be if you can afford it don't make any switches just yet, wait a few months & you'll get a much better rate! My fixed rate expires in May which I'm hoping will be perfect timing!

To help you get the best rate & product Hopie you'd be better off visiting a whole of market, non-fee charging mortgage broker, although I have been led to believe moneysupermarket are now offering a price comparison on mortgages! (Yet another nail in the coffin of my chosen career! :().  If you want any other adbise feel free to PM me! The market is so quiet at the minute I have a lot of time of my hands!!! :(

Just because the Bank of Englands rates changes doesn't mean other banks will change.  The banks get the money they lend customers from a number of sources including other banks.  Currently because of the credit squeeze the cost to the banks of borrowing money from other banks is still high so they don't want to cut the rates they charge by to much as it will reduce their profits.  The only way you can be sure of getting a mortgage that follows the Bank of England rates is to get a base rate tracker mortgage which will track the bank of England rate.

Banks set fixed rate mortgages on what they think will happen over the term of the fixed rate so if they think rates will increase over the next 5 years they will set the rate higher for a five year term than if they think rates will fall.  Here they are looking at the rates they are borrowing money at not just the Bank of England rate.  Again the current credit squeeze means the cost of borrowing money for the banks is high hence fixed rates are not falling.