Should you fix your mortgage repayments?

The release of the latest Homebuyers Survey from the Yorkshire Bank reveals that homeowners are moving away from fixed rate mortgage deals, with a 13% increase in those looking to take out a standard variable rate mortgage.

Yet, with interest rates set to rise - and according to the survey 61% of adults in the UK are expecting this to happen in the next 12 months - this seems a strange statistic. Anyone who is worried about being able to afford increased mortgage rates could find now is the best time to fix their payments while there are still good deals out there.

Homeowners may already have missed out on some of the best fixed-rate deals, as these are being withdrawn from the market or replaced by higher rates at a rapid pace. Mortgage advisers Charcol say more than 50 fixed-rates have been withdrawn in the last three weeks.

Financial information group Moneyfacts says it has also noticed a substantial move of this kind over the last few months, which has hotted up just recently. "We are seeing on average a 0.3% to 0.6% rate increase in fixed rates at the moment in anticipation of an interest rate rise by the Bank of England in the near future," says Moneyfacts' Melanie Stewart.

Unlike variable rate mortgages, which move solely in line with the base rate, fixed rates are also influenced by expectation in the money markets. If analysts in the money markets expect rates to rise, the rates at which lenders borrow from the market increases and this is reflected in the cost of fixed rate mortgages.

"If you do want to secure a fixed rate, now could be the time to do it before rates go up any further," says Ms Stewart.

Good fixed rate deals at the moment come from Britannia, who are offering a 4.89% fix for two years, and Portman, who have a rate of 4.99% fixed until May 1 2004. Alternatively you could opt for a capped rate mortgage, which puts a ceiling on interest rate rises, although these deals are few and far between at the moment.