For the 34th month in succession, the Bank of England’s Monetary Policy Committee (MPC) held the UK base rate of interest at its record low level of 0.5 per cent.

It’s good news for people who are current enjoying low variable rate mortgages, such as trackers or discounted products, but for those looking to take a new deal things are not as good as they could be.

Largely, banks and building societies raise their funds at rates through what is known as intermediation. This is the process of financial institutions pooling funds for lending between themselves with the Bank of England’s rate having little bearing on the amount of interest charged.

The cost of lending for banks and building societies has risen in recent months and the knock on effect is that tracker deals are now coming under different pricing structures.

But Ray Boulger of the independent mortgage broker John Charcol has raised concerns that the changes in the market do not reflect the price hikes that have been put into force.

"Six months ago three month Libor was 0.83 per cent and the cheapest lifetime tracker rates on offer from two of the most competitive lenders, ING Direct and Woolwich, were Bank Rate + 1.89 per cent and Bank Rate + 1.97 per cent respectively.

“Today three month Libor is just 0.26 per cent higher at 1.09 per cent but the cheapest lifetime tracker rates from both these lenders have shot up by over one per cent, with no change in the arrangement fees or maximum LTV.

However, there is good news for people looking for products that offer more security as a large number of fixed products are now available at lower rates than they were a few months ago.

MyMortgageDirect recently told potential first-time buyers that there is a wealth of good mortgage deals out there if they are prepared to put the time into searching the market.