Several of the biggest banks in the UK have announced increases in their mortgage rates, leading to worries for homeowners.
An expected June cut in interest rates by the Bank of England from 5.25 percent has been pushed back due to inflation not falling as quickly as expected, meaning that banks are finding it more expensive to borrow – a cost which they will inevitably pass on to customers.
Barclays, HSBC and NatWest have all announced increases to some fixed-rate mortgage deals from Tuesday 23rd April, and other lenders are expected to follow. There have already been some mortgage rate rises over the last few weeks as experts speculated when interest rate cuts would come. The trend follows the American economy, where inflation has not fallen as quickly as expected, prompting the Federal Reserve to delay any cutting of its interest rates.
Analysts
In the UK, Barclays is raising rates for the second time in a week, with a 0.1 percent increase across a range of its mortgage products. NatWest is raising some of its two and five-year “switcher” deals for existing customers by 0.1 percent, and HSBC is also increasing rates, though details have not yet been announced. Building societies are also affected, with the Leeds increasing the fixed rate on selected products by up to 0.2 percent for both new and existing customers, and the Co-op putting up the rates on some of its fixed deals by up to 0.41 percent.
Virgin Money has made changes to selected fixed rates, through brokers, for residential and buy-to-let borrowers, reducing some deals while increasing the cost of others.
Analysts say that with the average two-year fixed mortgage rate at 5.82 percent, and the average five-year fixed rate at 5.40 percent, a 0.1 percent increase would not have a great impact on those with small mortgages, but homeowners with larger loans of £300,000 or more would notice a significant difference of around $4,500 over five years.
The fear is that any additional worries added to homeowners existing fears about the cost of living may lead to panic in the property market and a drop in sales. With inflation currently running at 3.2 percent in the year to March, down from 3.4 percent the month before but still slightly higher than expected, and the next Bank of England Bank Rate decision due on 9th May, the less than expected fall in the annual rate of inflation has increased speculation that the Bank may not cut rates until the autumn at the earliest.
See also: Do You Know Your Rights as a Tenant?
