When the Bank of England base rate reached its historic low of 0.5% in March 2009, millions of homeowners found themselves safely cocooned against global economic storms as lower monthly repayments freed up cash to spend on other things.
"Over seven million homeowners have not reviewed their mortgage since March 2009," says unbiased.co.uk, the professional advice website.
Some 52% of those on standard variable rate (SVR) loans haven't bothered either. We can't believe our luck, and just hope it carries on.
But as inflation lifts off, rate rises look certain in the next 12 months.
One City survey says the number of rate rises expected in the year to January 2012 has soared from none to three in just eight weeks since late November.
The big danger is that even small rate rises will be hugely painful in many households because they will come off such a low base. A 2% rise on a £150,000 repayment mortgage would cost an extra £158 per month.
But people who need the biggest mortgages, measured by the loan-to-value (LTV) ratio, are struggling to get into the current market.
January figures show new mortgages had an LTV ratio averaging 58.9%, while remortgages averaged 51.8%.
In other words, the mortgage money went mainly to those who have got plenty of equity already. Lenders are playing it ultra-safe to guard against any further house price falls.
Michelle Slade, at financial data specialists Moneyfacts, says: "Increases in fixed mortgage rates combined with talk of a base rate rise sooner rather than later has resulted in heightened activity among existing borrowers looking for a new deal."
"Borrowers who have benefited from record low interest rates for the last two years may get a shock when it comes to finding a new deal. Some borrowers will struggle to borrow as much as they need, despite the increased number of mortgage products available."
Buyers with 10% deposits can pay 6%-plus for a loan, if they find one. Halifax's five-year fix costs 6.99%.
Many mortgages require a 20% deposit, with best deals requiring deposits of 25%-plus.
But, Halifax figures show the average house price - now £162,400 - is way down from the peak of £199,612 in August 2007.
Tens of thousands of existing owners who bought around the peak could find it impossible to re-mortgage, or move, unless they inject substantial savings of their own into the deal.
One obvious way for borrowers to strengthen their defences is to overpay on their mortgage when rates are low. In the long term, this saves thousands in interest charges and cuts years off the repayment period.
Many lenders have relaxed annual limits on overpayments allowed. Most allow overpayment by up to 10% per annum of the loan balance, but Lloyds brands - Halifax, C&G and BM Solutions - allow overpayment up to 20% per year on variable rate deals, without penalty, until March 31.
Besides the long-term benefits, overpayers are in a stronger LTV position when they need another mortgage.
Before overpaying, however, be sure to pay off expensive debts like credit cards, where rates can approach 30%.
Switching lenders, however, hardly gets any easier.
Drew Wotherspoon, director of marketing at independent mortgage adviser John Charcol, says: "The last few weeks have unquestionably been a rollercoaster in the mortgage market."
"Lenders aim to get just the right amount of business on their books before removing their market-leading mortgages from the market."
"John Charcol estimates 29 lenders have make changes to products already in 2011, with a good proportion changing almost their entire product range."
"The market is reminiscent of a long distant running race. No one really wants to lead the field for the majority of the race, they would much rather be with a number of their competitors in the chasing pack."
"They are nervous over service levels and taking on too much business, and when you are the front-runner in this market you get a deluge of business. Any lender who tops the best buys league on mortgages wants to quickly drop back, and will pull deals at a moment's notice."
"Borrowers should seek independent mortgage advice. A broker with excellent relationships with mortgage lenders knows in advance if and when a mortgage will be pulled and can act quickly to secure something for you."
"Doing it on your own means you could miss out in this here today, gone tomorrow market."
With economic prospects so uncertain, and fears of a double dip in the economy, a fixed rate mortgage is the only way to guarantee what you pay for two, five or 10 years ahead.
But Skipton BS, NatWest, Halifax, Barclays Wealth, First Direct and Yorkshire BS have pulled attractive "fixes" in the last two or three weeks and replaced them with more expensive deals.
ING lifted its five-year fix from 4.09% to 4.49% this week, followed by Accord (a Yorkshire BS brand available only through brokers), up from 3.99% to 4.19%.
"Pre-credit crunch, many lenders chased as much business as they could," says Ray Boulger, also at John Charcol.
"Now everybody has lending targets, and switches off the tap when the target is reached."
Boulger's advice to borrowers who haven't remortgaged so far is: "Don't chase fixes upwards from here."
"The window to arrange a new fix probably closed two weeks ago. If you haven't got one by now, accept you have missed the boat, and wait for a possible relapse in rates charged by lenders. This would happen if swap rates came down in a double dip recession."
Boulger thinks the obvious choice now is between standard variable rate loans - discounted for two to five years - and tracker loans, usually linked to the Bank base rate.
Bank of China has a lifetime tracker at Bank base rate plus 1.8% (currently 2.3%) with an loan-to-value of 80%, and only available on repayment terms.
In theory, a savvy couple could show a clear profit this year by taking more than they need from Bank of China and putting a maximum of £10,200 each, or £20,400 per couple, into a cash ISA earning 3% tax free and using their allowance for two successive tax years either side of April 5.
If there is only one rate rise this year, trackers have obvious attractions: by opting for a repayment mortgage at a lower rate, borrowers pay off the outstanding capital quicker.
They should also consider a tracker with a 'droplock' option, which enables them to switch the loan into a fixed rate loan at any time. The only cost is the arrangement fee, providing applicants don't need a larger loan.
The switch is not usually subjected to a credit check, which could be a godsend for borrowers who have seen their financial conditions deteriorate.
Lenders specialising in droplock trackers include Nationwide BS, Woolwich and - at slightly higher rates - Scottish Widows.
Woolwich has good rates on lifetime trackers, while Nationwide has attractive rates on two, three and five-year trackers.
Until we know how good or bad the economy will get, trackers increasingly look the safest port in a storm.
:: Information: John Charcol (0800 718 191 and www.john charcol.co.uk); financial advisors specialising in mortgages are listed at www.unbiased.co.uk.
Poundnotes
:: Prospects for savers are looking up, says a survey by personal finance website moneysupermarket.com.
It says the average of the top five cash ISA rates at 2.83% is 11% up on this time last year. It highlights the Nationwide BS e-cash ISA offering 2.95%, for existing members only.
Santander has a new range of fixed rate bonds, including three years at 4.01% on minimum £1 deposits, and two-year bonds from 3.30%, both rates gross.
Close Savings has a new Premium Gold fixed-term deposit paying 3.75% on minimum £10,000 deposits. It's a limited offer because Close believes £42 billion will be deposited in fixed rate savings accounts in the next 12 months.
Nationwide BS has launched its new 18-month Tracker Bond and e-Bond, both offering rates to track the Bank of England base rate.
The Tracker Bond offers an annual interest rate of 2.25%- 2.50% gross per annum/AER, while the 18-month Tracker e-Bond pays 2.35% - 2.60% gross, both depending on size of balance. And the rate rises if the Bank bumps up rates.
:: Increased competition in the credit card market sent rates to their lowest level in 2006, says Michelle Slade at Moneyfacts, but they have roared back and currently stand at a 13-year high.
It means borrowers with £5,000 debt on their card who repay the monthly minimum will repay an additional £2,360 over the life of the debt, compared with February 2006, which is serious because many customers find it harder to switch to another provider to cut interest charges.
Slade says: "Competitive deals for balance transfers and introductory purchases remain on offer, but providers are selective over who they accept for these deals."
:: There's a north-south divide on energy prices, says the quarterly price survey from energyhelpline.com, which finds that people in the most expensive part of the country pay nearly £100 more a year on a typical bill than those in the cheapest area.
The independent price comparison service says lazy consumers help major power companies to make even fatter profits.
The Scottish Lowlands - covering Glasgow and Edinburgh - has a typical gas and electricity bill of £1,192, followed by Merseyside/North Wales (£1,186) north-west England (£1,169), West Midlands (£1,165) and north-east England (£1,161).
In the cheapest area, south-east England, the typical dual fuel bill is £1,114. Consumers could save £343 a year by finding the cheapest online monthly direct debit tariff, claims energyhelpline.com director Mark Todd.
"There is a distinct north-south divide on energy prices in the UK which is directly related to the fact that so many people decide to stay with the default energy supplier for their locality."
Todd adds: "Energy companies charge people a range of different prices in the regions to maximise their profits. There is no cost explanation for this lottery, because some of the areas where it is more expensive to transport energy are the cheapest and vice versa."
Energyhelpline.com launched the quarterly price survey to track price movements across the country after five of the 'big six' - British Gas, npower, E.ON, Scottish and Southern Energy and ScottishPower - raised prices after a surge in wholesale prices during one of the coldest winters in history. Many energy companies are expected to announce bumper profits in February.
:: Events in Tunisia and Egypt are a sign that emerging equity and bond markets can deliver nasty and unexpected surprises, says David Coombs at fund manager Rathbone.
However, Coombs thinks events so far have caused "minimal contagion" to mainstream emerging markets, possibly because investors are starting to discriminate between the investment cases for different countries.
Andy Parsons at The Share Centre thinks potential trouble spots can still be lucrative in the long term, like South Korea and Taiwan, despite tensions with neighbouring North Korea, while Turkey has unique importance as a key hub for oil and gas transportation from the Middle East.
On the other hand, says Parsons, Venezuela is probably too risky, despite its vast oil reserves.
:: Higher-rate taxpayers could earn £2,085 more on savings of £50,000 in just one year by using an offset mortgage, claims First Direct, the HSBC online bank which supplies a quarter of all new offset mortgages.
The HSBC online bank currently offers a three-year fixed offset mortgage at 4.29% with a £99 fee applied to a borrowing of £250,000 with savings of £50,000.
Enquiries: 0800 482 448 and www.firstdirect.com.
:: High five savers
Phone No Rate Account Period Deposit Interest paid
Coventry BS 08457 665522 4.75% Fixed Bond (128) 30/04/2016 £1 Yly
Kent Reliance BS 08451 220022 4.51% Fixed end date bond 31/05/2016 £500 Yly
Coventry BS ww.thecoventry.co.uk 3.05% eNotice 30 Days £1,000 Yly
Dunfermline BS 0845 733 6688 3.00% 60 Day Notice 60 Days (B) £1,000 Yly
Cheshire BS 0800 243278 2.95% 30 Day Postal Saver 30 Day (P) £1,000 Yly
:: Top five borrowers
Phone No Rate Period Max% Adv Fee Incentive
HSBC 0800 494999 2.29% (rem) variable for term 60% £99 Yes
Leeds BS 0845 045 4049 2.45% (disc) for two years 75% £199 Yes
ING Direct 0845 032 8800 2.50% disc until 31/03/13 70% none Yes
First Direct 0845 610 0100 2.79% variable for term 65% £99 Yes
Furness BS 0800 220568 3.29% (disc) for three years 80% none Yes
Code:
*K- Operated by Internet, Telephone, or Post
*F - Fixed
*P - Operated by Post
*B - Operated by Post/Telephone
*T - Operated by Telephone
*W - Operated by Internet
*H - Operated by Internet/Telephone
*S - Available only to those aged 50 or over
*R - Available to those aged 60 and over.
:: Source: Money£acts - Tel: 01603 476 476 (All rates subject to change without notice).
