Homeowners were dealt another blow as experts warned that mortgage rates could rise another six percent next week
Homeowners have been dealt a fresh blow after experts warned that the key mortgage rate could rise above 6 percent again as soon as next week.
More than two dozen lenders raised their mortgage rates this week, taking some of the most competitive home loans out of the market, including several deals below 5 percent.
Borrowing costs have soared since Bank of England officials said last week that a long-awaited interest rate cut would be further delayed.
Santander yesterday raised mortgage rates for the second time in four days by a maximum of 0.26 percentage points.
The move follows increases at NatWest, Halifax and Nationwide, which also increased the prices of their fixed rate purchase and remortgage deals by up to 0.25 percentage points.
More than two dozen lenders raised their mortgage rates this week, taking some of the most competitive home loans out of the market
Borrowing costs have soared since Bank of England officials (pictured) signaled last week that a long-awaited interest rate cut would be further delayed.
According to UK Finance, the industry’s trade body, around 1.6 million fixed rate borrowers will need to take out a new mortgage this year (file photo)
Now the average two-year fixed rate deal could cross the 6 percent mark in the coming days – for the first time since December.
Aaron Strutt of Trinity Financial said: ‘If lenders continue to raise their interest rates in the coming weeks, it is likely that two-year deals will rise above 6 per cent in the next fortnight.
‘But you can still get a two-year contract for a lot cheaper… so it’s worth looking around.’
The average two-year fixed rate is 5.93 percent, up from 5.76 percent in January, according to the website Moneyfactscompare.
For someone with a mortgage of €200,000 over 25 years, this would be the difference between paying €1,259 and €1,280 per month, which equates to an extra €252 per year.
According to UK Finance, the industry’s trade body, around 1.6 million fixed-rate borrowers will need to take out a new mortgage this year.
Rachel Springall, financial expert at Moneyfactscompare, warned: ‘Borrowers who take out a fixed rate mortgage and reverse their interest rate this year could see their repayments rise, so it makes sense to get a deal with a lower interest rate. ‘
Building societies lowered their mortgage rates in January in anticipation that the Bank of England would lower its base rate in the first half of this year.
But the cost for banks to borrow money to lend to homeowners, or the “swap rate,” has risen, amid signs that buyers and homeowners will have to wait much longer for a drop in rates.
Markets are now predicting that the Bank will cut rates in August for the first time since the 2021 rate hike.