Mortgage costs rise as banks confirm higher rates
- Published
Many homeowners could face higher monthly payments after some of the UK鈥檚 biggest lenders confirmed mortgage rate increases.
HSBC, NatWest, Barclays, and Leeds Building Society have raised their rates on fixed-term loans, though not on all products.
Rates are rising as markets predict the Bank of England might not cut borrowing costs as much as expected due to stubborn inflation.
Rising rates will hit those who have not remortgaged since interest rates shot up in late 2022 following the 鈥榤ini鈥 Budget. About 1.6 million homeowners鈥 fixed-rate deals will end this year.
HSBC has increased the rates for 60% loan-to-value two-year fixed and five-year fixed mortgages from 4.63% to 4.83% and 4.24% to 4.48%.
NatWest has increased the equivalent 鈥渟witcher products鈥, for an existing customer moving to a new deal, from 4.89% to 4.99% and 4.39% to 4.49%.
Barclays said it had increased "most, but not all rates" this week. The rate for a two-year fixed deal with a maximum loan of 拢570,000 is up to 5.76% from 5.66% last week, while the equivalent five-year fixed rate is up to 5.00% from 4.90%.
Leeds Building Society also upped its rates for some products. Two-year and five-year fixed rates rose from 4.39% to 4.54% and 4.54% to 4.69%.
According to financial information company Moneyfacts, the average two-year fixed mortgage rate was 5.83% on Tuesday, up slightly from 5.82% the day before, while the average five-year rate was unchanged at 5.40%.
Tom Bill from agency Knight Frank predicted it will be a long time before homeowners have access to mortgage rates below 4%.
鈥淭he prospect of a five-year fixed-rate mortgage starting with a three anytime soon is pretty remote,鈥 he said.
He added 鈥渕ixed signals鈥 on price movements within the economy were making the Bank on England鈥檚 interest rate decisions difficult.
Expectations about the future direction of the Bank's benchmark rate have a major influence on the mortgage rates offered by High Street banks.
The Bank's key rate currently stands at 5.25% and earlier this year analysts had expected to see it being cut from June.
However, inflation - the rate at which prices rise - has not been falling as fast as expected, leading some to push back their forecasts of when the Bank will take action.