An expert has claimed lenders will face a conundrum when interest rates go up.

A future rise in interest rates may pose a problem for lenders, as they will have to consider whether to increase their mortgage rates at a similar level, it has been suggested.

Andy Pratt, chief operating officer at Alexander Hall, said it will leave banks and financial institutions in a conundrum.

"The real debate or question for lenders is to what degree they are going to maintain a margin on it - are they going to increase the difference in the same way?," he added.

Mr Pratt explained the dynamics of the market have altered in the last couple of years, as the base rate has fallen "dramatically".

However, he observed the level of funding costs have been maintained due to limited financial support and so the lenders upped the margin.

The specialist's comments follow the release of research by the Building Societies Association, which claimed the coalition and the housing industry need to consider new ways to keep people in their homes if they suffer mortgage difficulties.

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