Borrowers face a barrage of rate increases as several leading lenders announce mortgage rate hikes. Barclays, NatWest, HSBC, The Co-Operative Bank, and Accord have all confirmed increases in their rates over the coming days.
These adjustments follow a rise in swap rates, which form the basis of fixed-rate mortgages, prompting lenders to modify their offerings. The Bank of England (BoE) has raised interest rates to a 15-year high of 5.25% in an effort to combat persistent inflation.
Barclays has implemented its second rate increase in just seven days, with adjustments of up to 0.2 percentage points. HSBC will also raise rates on some two and five-year fixed-rate mortgages, with the exact changes yet to be disclosed. NatWest is increasing rates on several of its two and five-year switch deals by 0.1 percentage points.
Accord Mortgages has announced rate increases of up to 0.4 percentage points, while The Co-Operative Bank is adjusting rates on some deals by 0.38 percentage points. However, some deals will see a reduction of up to 0.07 percentage points.
Rising mortgage rates have a significant impact on monthly repayments. Two years ago, a £100,000 two-year fixed-rate mortgage with an interest rate of 0.99% would have resulted in monthly repayments of £376. Today, with the average two-year fixed-rate hovering around 5.28%, the monthly repayments for the same loan amount would be £601—a difference of £225 per month.
With around 1.6 million households currently on fixed-rate mortgage deals set to expire later this year, the prospect of significantly higher monthly payments looms over the housing market. To secure the best mortgage rates, it’s crucial to explore various options and consider factors such as deposit size, loan-to-value ratio, credit score, and salary. Additionally, locking in rates early before the current deal ends can be advantageous.
For expert guidance, consulting a mortgage broker can provide access to a wider range of deals. Comparing mortgage rates using a comparison tool or speaking to a financial advisor can also help borrowers secure the best possible rates.
