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31 minutes ago
Many homeowners could face higher monthly payments after some of the UK’s biggest lenders confirmed mortgage rate increases.
NatWest, Barclays, and Leeds Building Society have raised their rates on fixed-term loans, though not on all products.
Rates are rising as markets predict the Bank of England might not cut borrowing costs as much as expected due to stubborn inflation.
Rising rates will hit those who have not remortgaged since interest rates shot up in late 2022 following the ‘mini’ Budget. About 1.6 million homeowners’ fixed-rate deals will end this year.
NatWest has increased the rates for 60% loan-to-value two-year fixed and five-year fixed “switcher products”, for an existing customer moving to a new deal, from 4.89% to 4.99% and 4.39% to 4.49%.
Barclays said it had increased “most, but not all rates” this week. The rate for a two-year fixed deal with a maximum loan of £570,000 is up to 5.76% from 5.66% last week, while the equivalent five-year fixed rate is up to 5.00% from 4.90%.
Leeds Building Society also upped its rates for some products. Two-year and five-year fixed rates rose from 4.39% to 4.54% and 4.54% to 4.69%.
According to financial information company Moneyfacts, the average two-year fixed mortgage rate was 5.83% on Tuesday, up slightly from 5.82% the day before, while the average five-year rate was unchanged at 5.40%.
Tom Bill from agency Knight Frank predicted it will be a long time before homeowners have access to mortgage rates below 4%.
“The prospect of a five-year fixed-rate mortgage starting with a three anytime soon is pretty remote,” he said.
He added “mixed signals” on price movements within the economy were making the Bank on England’s interest rate decisions difficult.
Expectations about the future direction of the Bank’s benchmark rate have a major influence on the mortgage rates offered by High Street banks.
The Bank’s key rate currently stands at 5.25% and earlier this year analysts had expected to see it being cut from June.
However, inflation – the rate at which prices rise – has not been falling as fast as expected, leading some to push back their forecasts of when the Bank will take action.
