UK’s biggest banks raise mortgage rates

mortgage rates

Mortgage rates have increased over the last few weeks as views have changed on when BoE might reduce borrowing costs

Some of the UK’s biggest banks are raising mortgage rates as expectations of when the Bank of England (BoE) will cut interest rates are pushed back.

Barclays, HSBC and NatWest are all raising some costs on fixed-rate mortgage deals from Tuesday.

Mortgage rates have increased over the last few weeks as views have changed on when BoE might reduce borrowing costs.

BoE is now not expected to reduce its benchmark rate as early or as often as previously thought.

The announcement from Barclays, which is increasing rates for the second time in the space of seven days, will see a 0.1% rise across a range of its mortgage products.

NatWest said it would increase some of its two and five-year “switcher” deals for current customers by 0.1%.

HSBC added it was raising some of its rates on Tuesday, but did not give details of the hikes.

Building societies are also increasing fees. Leeds Building Society said it was raising the fixed rate on selected products by up to 0.2% for both new and current customers.

The Co-op said it was putting up the rates on some of its fixed deals by up to 0.41% from Monday but reducing the rate by 0.07% on others.

As per financial information service Moneyfacts, the average two-year fixed mortgage rate is 5.82%, while the average five-year fixed rate is 5.40%.

Broker Justin Moy from EHF Mortgages said a 0.1% rise would not make a big impact on those with small mortgages, but cautioned homeowners with larger loans – £300,000 or more – would notice a difference.

With Barclays, they have had two nibbles, 0.2% last Thursday and then 0.1% tomorrow (Tuesday), that’s 0.3% overall. For someone borrowing £300,000 that’s a rise of £4,500 over five years, he told the BBC.

The hikes would cause “loads of aggravation” for borrowers and brokers, Moy added. It starts a panic off because customers see rates rising.

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