Skipton Building Society, TSB and Nottingham Building Society are the other lenders who have followed the lead of HSBC, NatWest and Coventry Building Society in raising rates.
This is in response to rising swap rates, which lenders use to set their rates. The ongoing unrest in the Middle East is driving up energy prices and increasing inflationary pressures, leading to this price volatility.
But for borrowers moving to new fixed-rate deals, higher rates could mean higher repayments.
Nicholas Mendes, technical director of mortgages at John Charcol, said: “For borrowers, even a modest change in rate can add to the monthly cost. For a £200,000 mortgage repayment over 25 years, moving from 5.50% to 5.65% would increase the monthly payment from around £1,228 to £1,246.”
“An extra £18 a month may not seem like a huge sum on its own, but it still builds up over the course of the year, and any further repricing would push that cost up again. That’s why delaying unnecessarily can lead to borrowers paying more than they need to.”
As such, the message from Mendes, and other mortgage brokers, is to act soon if you need to get a mortgage, before rates rise further.
In fact, Rachel Springall, financial expert at Moneyfactscompare.co.uk, said lenders are prepared to raise rates further.
“Swap rates are much higher than they were a month ago and are a major influence on how lenders price their fixed-rate mortgages,” she said.
“Lenders look at spreads very carefully, so it would not be wise to price their deals too low if expectations are for interest rates to rise, even in the short term.”
She added: “The hopes of borrowers who expected mortgage interest rates to decline in the coming weeks have been dashed.
“The prolonged conflict (in the Middle East) increases the chances of the Monetary Policy Committee voting in favor of increasing the Bank of England’s base interest rate (BBR). However, this may not happen until November, according to economists.
“Regardless of any changes to the BBR, it is still essential that borrowers do not delay in seeking advice to navigate the mortgage maze.
“Those looking to remortgage can do so around six months in advance by securing a transfer product with their existing lender, for peace of mind.”
