HOMEOWNERS eyeing up a new plasma television or dreaming of a family holiday will no longer be able to count on their bricks and mortar to fund such plans. While homeowners have traditionally been able to boost their coffers by hundreds or thousands of pounds by switching to a low-cost fixed-rate mortgage, a dearth of money-saving deals means that those days are at an end.

Cheap fixed-rate deals, the first choice for 70 per cent of all mortgage borrowers, have already begun to disappear. Lenders have been frantically withdrawing their low-rate fixes over recent weeks and replacing them with more expensive loans, despite the Bank of England base rate having remained at 4.5 per cent for nine months.

In July last year, when the base rate was at 4.75 per cent, homeowners could snap up a two-year fix at 4.22 per cent. Now, deals priced at less than 4.8 per cent are few and far between.

The blame for the rising price of fixed-rate loans falls on swap rates, the money markets that determine fixed-rate prices. Swap rates have been spiralling recently, after much talk of an imminent rise in the base rate.

The increasing cost of buying tranches of money to fund fixed-rate loans has prompted lenders such as Abbey, HSBC and Nationwide to increase their two-year fixed rates by up to 0.4 percentage points.

Halifax increased its two-year fix from 4.39 per cent to 4.99 per cent this week. A homeowner remortgaging a £250,000 property to the bank’s new, more expensive, deal will pay an extra £2,000 over two years.

The rising cost of fixes has prompted Paul and Jacqueline Rodgers to break the habit of a lifetime with their next mortgage deal. The couple, from Oldham, have always gone for fixed-rate mortgages in the past, but they are switching from a two-year fix at 4.5 per cent with Alliance & Leicester to a lifetime tracker from Woolwich, charging 0.19 percentage points above the Bank of England base rate for the life of the loan, giving it a current pay rate of 4.69 per cent.

Mr Rodgers, a railway engineer, found the deal through London & Country, the mortgage broker. He says: “Two-year fixed rates have always been cheaper in the past — I guess we became institutionalised by them — but the A&L deal is no longer such good value and carries relatively high fees to remortgage with them. I am confident that the Woolwich deal will remain good value because interest rates are not likely to rocket. There is also the bonus of not having to remortgage every two years.”

The Rodgers, who have a £78,000 mortgage on their three-bedroom, mid-terrace house worth £150,000, are not alone. Thousands of borrowers are considering switching to variable-rate loans, which are linked to a lender’s standard variable rate (SVR), or to tracker loans, which follow the base rate, to sidestep high fixed rates.

The best tracker deals on the market are significantly cheaper than the best fixed-rate deals. BM Solutions charges 0.45 percentage points below the base rate on its two-year tracker, giving it a pay rate of 4.05 per cent. Even if the base rate were to rise by a quarter of a point, this deal would still be more competitive than the best two-year fix on the market, beating First Active’s 4.49 per cent deal.

Nick Gardner, director of Chase De Vere Mortgage Management, another broker, says: “Many experts think that rates will stay on hold, or that the next move will be downwards, so a gamble on one of the lowest-priced trackers or variable rates may be worthwhile.”

But there is some good news for borrowers who prefer the security of fixed-rate deals. Ray Boulger, of John Charcol, another broker, says: “There is some evidence that swap rates have peaked and confidence is growing that they will begin to level out. So although fixed rates may not start to come down again for a while, they are unlikely to rise further.”

Whatever deal you choose, it will still be better than staying on a lender’s SVR, which can be more than 6 per cent.