Speed of mortgage rate increases appears to be slowing down

The pace of mortgage rate hikes finally appears to be slowing down after two weeks of sharp increases, but deals now stand at an eye-watering average of nearly 6 percent.

The average price of a two-year fixed deal was 5.83 percent today – only a small increase from 5.82 percent yesterday, according to financial experts at Money Facts.

But it is up from 5.64 percent a week ago, 5.35 percent two weeks ago and 5.30 percent a month ago. A year ago, in June 2022, that was only 3.25 percent.

As for five-year fixed deals, the average today was 5.48 percent — slightly down from yesterday’s 5.49 percent. But it’s still up from 5.32 percent a week ago and 5.02 percent two weeks ago. And a year ago that was still 3.37 percent.

The total number of mortgage products is now also rising again, after a dip in the past two weeks, and now stands at 5,056. This was an increase from 4,831 yesterday.

It was also up from 4,597 two days ago and 4,888 a week ago – but down from 5,192 two weeks ago. But it was 5,189 a month ago and 4,987 a year ago.

Moneyfacts said today’s data shows some lenders are returning to the market with new deals, but most of them are priced higher than the products they pulled out.

It comes after HSBC closed all of its new customer deals after being swamped with requests from borrowers scrambling to refinance before interest rates climb even higher.

Then, this afternoon, HSBC said it was reinstating the deals – but only for a “limited time.”

Homeowners and buyers scramble to secure deals as rates continue to rise amid the ongoing mortgage market turmoil.

Moneyfacts spokesman James Hyde told MailOnline: ‘Several lenders who have temporarily withdrawn from the market in recent weeks have already launched new ranges.

For the most part, recurring rates are priced higher than withdrawn rates.

“We are still seeing product withdrawals from smaller lenders – some pulling in all firm deals and others limiting this to a handful of products.

“The availability of residential mortgages has risen again to more than 5,000, after falling to less than 4,600 earlier this week.”

It comes after HSBC warned borrowers just four hours in advance yesterday that it would withdraw its new business, residential and buy-to-let offers at 5 p.m.

However, it was forced to close shop even earlier at 3:30pm after a deluge of enquiries.

It was understood no mortgage products would be available to new HSBC customers until Monday – but the lender then said today it would reinstate deals for a ‘limited time’.

Banks and building societies have taken out hundreds more home loans since May 24, when official figures showed inflation in April had remained higher than expected – 8.7 percent.

Economists believe the Bank of England will have to raise its base rate – currently at 4.5 percent – ​​to 5.5 percent in a bid to curb inflation.

David Hollingworth, of mortgage broker L&C, said: ‘Lenders have to make tough decisions because the market moves so fast.

“We have not yet seen such a large lender withdraw such interest in 2023, it is quite radical.

HSBC topped the buy list because they hadn’t reviewed in a whole week. It’s no wonder it’s flooded, and it just shows that the speed is increasing.’

An HSBC spokesperson said: “To ensure we can stay within our operating capacity and meet our customer service obligations, we occasionally need to limit the number of new customers we can take on each day.”

Most lenders have already raised rates on fixed deals or pulled deals from the market, including Halifax, which increased its deals by up to 0.82 percentage points.

Santander raised rates by up to 0.43 percentage point over the weekend. Barclays, NatWest and Nationwide also raised mortgage rates.

Justin Moy, of EHF Mortgages, said lenders priced their deals tactically out of reach on the expensive side, as a shield to avoid being swamped by new applications.

The latest rush echoes the more severe shock to the mortgage market last September, as lenders scrambled to suspend mortgage offers for new customers, sparked by investor reaction to former Prime Minister Liz Truss’s disastrous mini-budget.

Two-year government bond yields reached their highest level since then yesterday amid a sell-off in global markets.

Graham Cox, founder of SelfEmployedMortgageHub.com, said: ‘Every lender is currently battling rising UK government bonds and swap rates, the latter determining the price that lenders pay to borrow in the money markets.

‘Higher financing costs for banks and building societies are passed on in higher mortgage interest rates.’

And Gaurav Shukla, mortgage expert at Home Me, said: “I’ve had a few clients this week who decided to backtrack on buying a home shortly after accepting an offer because rates were rising with little or no money from the market. were taken. no message.

“We’ve seen a number of mainstream lenders cut rates without any notice and this is creating urgency among brokers and, to some extent, panic among customers.”