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It was only a few days ago that I predicted that mortgage rates will rise even though the Bank of England base rate has not changed for a few months. Well it seems that this is starting to happen now.

According to the Telegraph today, mortgage rates have hit a 9 year high as lenders such as the Abbey have just increased rates for their standard tracker mortgages.

So as we all heaved a sigh of relief about the base rates last week, there is still gloom for those with mortgages, particularly if you are coming to the end of your fixed rate term. Buy to let investors could be badly hit too.

Its becoming an interesting, and painful, situation whereby mortgage costs are rising even though the Bank of England base rate isn’t. Deciding what is best for your mortgage seems more difficult because although it is unlikely that base rates will rise in the foreseeable future, we now have to consider how long the credit crunch will last.

So what can you do?

Many brokers are recommending that you arrange a new mortgage as soon as possible, if you are coming to the end of your fixed rate term. It generally takes a couple of months to arrange a mortgage so if your term is ending before Christmas then you should act now to secure a good tracker or discounted rate deal before mortgage rates climb higher.

This means that if mortgage rates start to fall early next year as the financial crisis (hopefully) eases, then at least you will benefit from lower mortgage payments.

With autumn upon us, we will soon be turning our central heating systems on so our energy costs are going to rise again. This is one of the reasons why we published some handy tips about how to save money on fuel bills on MoneyHighStreet.com.

As we mentioned in that article, insulating your loft properly is a great investment as once it’s done, you reap the rewards of lower heating costs year after year. Depending on the size of your loft, you will probably recoup the costs of loft insulation within two years - three at most.

Improving your loft insulation will also be beneficial when your home is inspected for its energy efficiency report as part of the HIP, if you decide to sell your house in the future.

Now is the time to improve your loft insulation so that you benefit as soon as the weather gets colder. Another powerful reason is that B&Q have a sale of loft insulation products at the moment so you can save £4.75 per roll of the excellent Knauf Space Blanket insulation. It’s really easy to lay and at these prices is a real bargain.

I took a trip to B&Q last night and filled the car with this insulation. It took me ten minutes to cover a third of the loft with it when I got back. A couple of more trips to B&Q before they raise their prices again and the job will be done.

It’ll really make a difference to our gas bills in the next few months.

Saving money on this insulation now will mean making savings on your heating bills for as long as you live in your house.

Today is the day in which home information packs are now mandatory for the sale of three bedroom houses in the UK. This unpopular law is now affecting 60pc of the house market, but there is strong evidence to show that HIPs are reducing the number of 4 bedroom houses being marketed by up to 67 percent!

There is a damning article in the Daily Telegraph that points out, in detail, some of the negative effects HIPs are having on the housing market already. And they have only been law for a month.

According to this article, the number of larger properties being put onto the market have fallen by 67pc in London and around 50pc in northern England. So if the number of houses being marketed falls significantly, it can only do one thing and that is force house prices upwards.

Now that HIPs are required for three bedroom houses, if we see the same number of falls in the numbers of these houses being marketed, then potentially catastrophic consequences could result for the property market.

We are entering unchartered waters with HIPs now. Sellers don’t like them as it is extra cost and stress for them, and buyers seem disinterested in them too. So home information packs are being less popular a month on from their introduction and they are likely to bring more instability into the housing market, not less, as the government intended.

With interest rates being maintained at 5.75pc by the Bank of England yesterday, it seems like borrowers can heave a sigh of relief - their mortgages will remain as they are and other costs of borrowing won’t rise this month either.

Well actually that is only partly true as beleaguered borrowers may still find their mortgage payments increasing, even though the Bank Of England base rate hasn’t changed this month.

This is bad news for those with big mortgages who were hoping for a bit of reprise after five hikes in interest rates during the last year. But how can this be? After all, its not costing the mortgage companies any more to borrow money.

Well it seems the credit crunch is exerting its influence yet again. Although the base rate has remained the same, the interest that the banks are charged for inter bank lending (the Libor), has increased significantly. So it costs more for banks to borrow from each other. If it costs them more to borrow then you can bet your bottom dollar that it will cost you more too.

So although the Bank of England is acting to increase the availability of credit to banks in the UK, this action may not be enough to stop banks recouping their higher interest costs, by increasing the costs of their mortgages.

In short you pay for this crisis with higher mortgage payments.

So for those two million home owners with fixed payment mortgage nearing the end of their term, yesterdays news about interest rates was good news. However these people, along with anybody with a mortgage, should still be prepared to pay more for their mortgage soon, unfortunately.

It looks like the Bank of England has noticed that there are a few things amiss with credit availability at the moment as it has made a significant move today to make it easier for banks to lend to each other.

As I’ve pointed out before, a credit crunch occurs when banks become reluctant to lend to each other. This reduction in credit availability cascades through the economy and can trigger a recession.

What the Bank of England has done today is make a large amount of money available for the banks to borrow at favourable interest rates. This availability of funds should get the inter bank loans flowing again, and low and behold, the threat of recession starts to recede.

So that’s good news, but how does that affect you and me?

Tomorrow (Thursday) the Monetary Policy Committee meets to decide on interest rates. As they have made billions of pounds available to banks at the current base rate today, they are hardly likely to raise interest rates tomorrow.

So it looks to me like we will have another month without a rise in interest rates and that is good news for many of us!

House reposessions are increasing, according to a report by RICS, the Royal Intitution of Chartered Surveyors. They are predicting that there will be 124 repossessions a day in 2008.

With houses becoming less affordable to buy and own after the latest interest rate rises - though a trip to snap up a bargain at the property auctions might be beneficial soon if so many repossessed houses are to be sold - more home owners are feeling the pinch.

What is surprising is that although repossessions are increasing and the house market is slowing down, consumers are still out there spending and borrowing at “uncomfortable rates”.

Unfortunately the full effect of the latest interest rate rises is yet to be felt and many people will have to cope with large increases in mortgage payments when their fixed rate mortgage term exnds soon.

Couple this with high consumer spending and borrowing, then I fear that the RICS prediction of so many house repossessions will come true next year.

The Sunday Times published a damning article about HIPs yesterday in which it described home information packs as mostly being a nuisance for sellers and of little interest to buyers.

This is demonstrated by the experience of one house seller whose house was inspected by an energy efficiency inspector recently. The inspector measured the size of each room (later to be repeated by the estate agent - where is the efficiency in that) and will probably provide a low energy efficiency rating for his house, which is not surprising as it was built in the 1880’s.

Any buyer will accept that a house of this age will not, and cannot, meet latest enegy specifications, so they will ignore the report and still buy the house anyway.

Of greater concern to estate agents, apparently, is the fact that speculative house sellers, who put their house on the market to test the water, are being deterred by the costs of the home information packs.

This is reducing the volume of homes going onto the market and could actually force house prices up.

Following intervention by George Bush, the head of the US Federal Reserve has hinted that a drop in interest rates may be on the cards for America soon.

There is real concern in the US that the sub prime housing problems could tip the country into recession, forcing many lenders out of business and increasing the turmoil in the financial markets.

Whilst the economy in the USA might seem disconnected from our every day lives in the UK, a reduction in American interest rates will be good news for Brits for the following reasons:

• If America’s economy moves into recession, it could trigger a recession world wide so by averting recessionary pressures in the US, we could be spared the pain of reduced growth in the UK.
• Greater stability in the US financial markets will also help reduce jitters in other finance markets worldwide. Recent falls in stock markets could be reversed as the fear of recession recedes.
• Reducing interest rates in the US could present an interesting dilemma for the Bank of England as the US dollar will fall in value against sterling. Whilst great for those travelling to the USA, UK manfacturers will struggle even more to sell their goods to American customers as they become too expensive because of the strength of the pound against the dollar. If the Bank of England raise UK interest rates in their battle against inflation, the pound will strengthen even more against the dollar, harming UK manufacturing. A fall in US interest rates will make it harder, though not impossible, for the Bank of England to raise interest rates in the UK to rise.

So as long as inflation doesn’t rise if interest rates stay where they are, a cut in the cost of borrowing in the US could be welcome news for us Brits.

Much as I has suspected from the number of houses that are proving difficult to sell in my area, house price growth is slowing down across the country.

The Nationwide, in its latest press release about the property market, points out that annual growth in house prices is slowing. The annual rate of growth fell to 9.6 percent during the last year, whereas it was 9.9 percent during the year to July.

Note that the Nationwide is not saying that house prices are falling, they are just not increasing as fast as they were.

Citing the impact of the latest interest rates and importantly the expectations of lower house prices as some of the main reasons for this slow down, the Nationwide is not, as yet, blaming the credit crunch issues as a major factor in the housing market.

That we are now starting to anticipate lower house prices is crucial. Financial markets are driven by sentiment and if enough of us believe that prices are going downwards, there will be less buyers and guess what happens? The house prices do go down until buyers feel confident to dip their toes in the water again.

So where are we in the cycle of house prices at the moment?

To my mind now is not the time to invest in property, unless you really have to. Are we at, or even slightly beyond, the peak of the market? Quite possibly, although some areas are still growing in demand, and sellers are still asking high prices.

I feel now is the time to reduce your debts - particularly your mortgage - and to save. With higher interest rates saving becomes more attractive.

Credit card companies are sneaky. Just when you thought they were tamed by the Office of Fair Trading who forced them to reduce their default fees, we learn today that card issuers are increasing their charges in other ways, according to a report by Which.

One of the main ways that credit card companies are increasing their charges is with balance transfers. Transferring your balance from one card to another (the so called rate tarts) used to be a great way of juggling your debts without incurring transfer fees and enjoying long interest free periods.

Not any longer. Some credit card companies, such as LloydsTSB, for example, will now charge you up to 3 percent of the balance transferred to them. This means if you transfer £5,000, you may now incur a transfer fee of £150.

There are less obvious charges to be wary of too. Inactivity charges are perhaps the worst. You may even be charged £35 per year for not using your card. So if you manage your money well and only have a credit card for occasional or emergency use, then you better chose your credit card carefully.

I personally dislike credit card cheques and the way that they are marketed. Charges for these are rising too, so be careful if you feel tempted to pay with one of these. Barclaycard, for example charge 2.5% fees for credit card cheques.

I understand that credit card companies aren’t charities and need to make a profit, but it seems that we all need to be aware of, and consider carefully, any charges that may not be obvious at first glance.

Credit card suppliers operate in a highly regulated industry and have to state what charges and fees you will incur, however if you have followed some of the links in this post, you will see that only careful reading will prevent any nasty surprises when you receive your monthly statement.

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