Over 20 lenders have raised their mortgage rates this week, pulling some of the most competitive home loans from the market, including several deals below 5%
Homeowners have been dealt a fresh blow after experts cautioned key mortgage rates could soar above 6% again as early as next week.
Over 20 lenders have raised their mortgage rates this week, pulling some of the most competitive home loans from the market, including several deals below 5%.
The cost of borrowing has been soaring since BoE officials hinted last week that a long-awaited cut in rates would be delayed further.
Santander yesterday raised its mortgage rates by up to 0.26 percentage points for the second time in four days.
The move follows hikes at NatWest, Halifax and Nationwide, which also pushed up the prices of their fixed-rate purchase and remortgage deals by up to 0.25 percentage points.
Now, the average two-year fixed-rate deal could surpass the 6% mark in the coming days – for the first time since December.
Aaron Strutt, of Trinity Financial, said: If lenders keep on putting up their rates over the next few weeks it is likely that two-year deals will go over 6% in the next week or two.
But you can still get a two-year deal for much cheaper. So it is worth shopping around, Strutt added.
The average two-year fixed-rate deal is 5.93%, up from 5.76% in January, as per website Moneyfactscompare.
For someone with a £200,000 mortgage over 25 years this would be the difference between paying £1,259 and £1,280 a month, equivalent to an extra £252 a year.
Nearly 1.6million borrowers with fixed-rate deals will need to remortgage this year, as per UK Finance, the industry trade body.
Rachel Springall, finance expert at Moneyfactscompare, cautioned: Borrowers coming off a fixed-rate mortgage and onto their revert rate this year could see their repayments shoot up, so securing a lower rate deal is wise.
Building societies reduced their mortgage rates in January in anticipation that the BoE would cut its base rate in the first half of this year.
But the cost for banks to borrow money to lend to homeowners, or the ‘swap rate’, has been increasing amid signs that buyers and homeowners will have to wait much longer for a drop in interest rates.
Markets now forecast the Bank will cut rates in August for the first time since it began raising rates in 2021.