All those borrowers who have opted for a fixed rate of interest on their homeowner loan or secured loan over the course of the past twelve months or so, are likely to be kicking themselves at the moment, as they are forced to sit back and watch interest rates continue to fall, leaving them paying well above the odds for their own loan, whilst those with a tracker rate on their loan are enjoying the benefits of significant rate cuts.

However, fixed rate loans account for around 69 per cent of all homeowner loans in the UK, an increase of 18 per cent on the same time last year.

But it seems that banks and building societies are cashing in on borrowers opting for a fixed rate loan in the rates they are currently charging their customers.

Although the cost of borrowing on the wholesale money markets has reduced by 2.61 per cent since the beginning of October this year, the average two year fixed rate secured loan has only dropped by 0.71 per cent, which means that lenders are not passing on the savings they are receiving to their customers with these loan products.

Borrowers who opt for a fixed rate loan usually expect that the rate they pay will be slightly higher than a tracker rate, but with things as they are at the moment, there is a difference of 1.16 per cent between the average two year fixed and tracker loan rates, whereas this difference was only 0.14 per cent twelve months ago.

Michelle Slade of MoneyFacts.co.uk said “By not reintroducing cheaper tracker mortgages to the market, the lenders are leaving borrowers with little option but to go on to more expensive fixed rate mortgages.

It is evident that lenders are continuing to increase their margins, despite a fall in the cost of funding. It would appear that all lenders are adopting a similar approach, despite calls from the government to pass on cuts to borrowers.”