Halifax pushes up fixed mortgage rates with some going beyond 7% as market waits for latest inflation data

Halifax has raised its mortgage rates by as much as 0.6 percentage points, with several of its fixed products now exceeding 7 percent, as lenders continue to count on the likelihood of further rate hikes.

The changes apply to loans for homebuyers, including those for first-time buyers. A two-year fixed rate with a 40 percent down payment was 6.07 percent, rising to 6.67 percent as of midnight July 19.

For those taking a two-year fix with a 10 percent down payment, the rate will increase from 6.62 percent to 6.99 percent.

On a £200,000 mortgage over 25 years, the increase increases monthly payments by £47 from £1,365 to £1,412.

Currently, the lender has two rates above 7 percent — 7.01 percent and 7.19 percent, both two-year fixes on new construction homes.

Borrowers are still hammered by rising interest rates as the market now bets on the Bank of England raising its base rate a 14th time from its current 15-year high of 5 percent.

The two-year average fixed rate is 6.78 percent, according to Moneyfacts, and has held steady for a few days pending new official inflation numbers.

Earlier this month, average mortgage rates hit a 15-year high, surpassing the level reached at the height of the mini-budget fallout last October.

The Bank of England made its thirteenth consecutive key rate hike last month after stubbornly high inflation in May prompted the Monetary Policy Committee to continue its efforts to bring the rate down.

Halifax isn’t the only lender raising rates, Coventry has also raised rates on some of its mortgage products.

All of the construction company’s new-build properties have been increased and it has withdrawn all of its new business rates for buyers with a 20 percent down payment.

Nicholas Mendes, mortgage technical manager at John Charcol, said: ‘While swap rates fell slightly early last week, this trend reversed towards the end of the week. in 19 have come down or have remained persistently stubborn.

“Halifax is clearly erring on the side of caution, it will be interesting to see how other lenders will react upfront as well.”

Modupe Adegbembo, G7 Economist at AXA Investment Managers told This is Money: ‘Our opinion [on inflation] does not differ much from market expectations

We think the CPI will be 8.1 percent, but the core will remain at 7.1 percent and we think the BOE will be up 25 basis points. increase in mortgage rates.’

The impact of rising mortgage rates is expected to be significant as approximately 1.3 million households will see their mortgages extended from Q3 2023 to Q3 2024, the majority of which currently have interest rates below 2 percent.

Lewis Shaw, owner of mortgage broker Shaw Financial Services, said: “With the current interest rate environment, the outlook is not great.

“With thousands of households having to renew their deals in the coming weeks and months and facing increases in their mortgage payments, there is inevitably a lot of pain that has not yet been felt.

‘This could easily translate into falling house prices; how much no one can accurately predict.

“We have to hope that tomorrow’s inflation data is positive, otherwise things could get worse.”

Lenders saw an increase in mortgage defaults in the three months to the end of June and expect more borrowers to miss payments in the coming months.

Lenders’ responses to the Bank of England’s survey of credit conditions showed that mortgage defaults rose by 30 percent in the second quarter of the year.