Q We are looking to remortgage when our fixed rate expires in a couple of months. Looking at what our current lender is offering, we could go for another fixed rate of 2.99% for two years. But our lender's standard variable rate (SVR) is 4.99%, so I don't understand why would they encourage us to fix at a lower rate than that if everyone thinks the base rate is going to rise. I'm confused. NS

A The fixed-rate deal available from your lender isn't affected by changes in the base rate. Just as you can borrow at a fixed rate, so your lender can. Mortgage lenders make their money by borrowing money at one interest rate and lending it on at another – higher – rate. So, for example, your lender could have managed to borrow at a fixed rate of 1.99% for two years and is making money by charging you 2.99%. Your lender is happy because it will be getting more in interest than it is paying out, and, in theory, you're happy because you're getting a better rate than the SVR and are unaffected by changes in base rate for two years.

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