More lenders are set to withdraw competitive fixed price deals over the coming days and weeks, and replace them with higher rates.
Hard-pressed householders are having to pay more for their mortgages, in advance of expected base rate rises, and at a time when inflation is being stoked by higher fuel and food prices.
Lenders are raising rates against the backdrop of increased costs of wholesale borrowing, with five-year swap rates having shot up from 2.66% at the start of the year to nearly 3%. Two, three and ten-year swap rates have also soared, with ten-year swap rates now standing at 3.78%.
The rise in swap rates is taking place against the growing possibility that the Bank of England will have to put up base rates sooner rather than later to help combat higher-than-expected inflation.
Skipton Building Society increased some of its fixed rate mortgages this week by up to 0.7%. Until last week, it offered a five-year fixed rate deal for those with a 25% deposit at 4.08%, but the rate has since been hiked to 4.78%. On a £150,000 interest-only mortgage, that would be a rise of £87.50 a month.
But a spokeswoman for Accord Mortgages, which released a new suite of products just last week, says it has no plans to re-price its products.
An industry insider, said: “Borrowers will be astounded that mortgage rates are rising when interest rates haven’t shifted in nearly two years. But the pricing of fixed rates is based on money market rates, not Bank Rate, and these have soared since the start of the year on the expectation that interest rates will rise sooner rather than later.”
Hard-pressed householders are having to pay more for their mortgages, in advance of expected base rate rises, and at a time when inflation is being stoked by higher fuel and food prices.
Lenders are raising rates against the backdrop of increased costs of wholesale borrowing, with five-year swap rates having shot up from 2.66% at the start of the year to nearly 3%. Two, three and ten-year swap rates have also soared, with ten-year swap rates now standing at 3.78%.
The rise in swap rates is taking place against the growing possibility that the Bank of England will have to put up base rates sooner rather than later to help combat higher-than-expected inflation.
Skipton Building Society increased some of its fixed rate mortgages this week by up to 0.7%. Until last week, it offered a five-year fixed rate deal for those with a 25% deposit at 4.08%, but the rate has since been hiked to 4.78%. On a £150,000 interest-only mortgage, that would be a rise of £87.50 a month.
But a spokeswoman for Accord Mortgages, which released a new suite of products just last week, says it has no plans to re-price its products.
An industry insider, said: “Borrowers will be astounded that mortgage rates are rising when interest rates haven’t shifted in nearly two years. But the pricing of fixed rates is based on money market rates, not Bank Rate, and these have soared since the start of the year on the expectation that interest rates will rise sooner rather than later.”
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