26 February 2024 , 14:33
772
0
More and more lenders are raising their mortgage rates after slashing them at the beginning of this year.
The year began with the "mortgage price war" as lenders across the board cut their rates with anticipation that the Bank of England was to cut its base interest rate. Within the first week of 2024 over 30 lenders slashed their borrowing costs. However, the price war came to an abrupt end when inflation remained at 4% in January which forced the Bank of England to hold its rate at 5.25% for the fourth time.
After this, lenders including Santander, HSBC, TSB, Coventry Building Society, and Natwest started to increase their rates. According to the financial data company Moneyfactscompare.co.uk, last week (from February 19 to February 23) the following lenders upped their mortgage rates:
- HSBC - +0.45%
- Santander - +0.34%
- TSB - +0.30%
- Natwest - +0.15%
- RBS - +0.20%
- Virgin Money - +0.10%
However, Moneyfactscompare.co.uk noted that this was on top of other rises as the week before this NatWest and RBS upped rates by up to 0.21%, TSB by up to 0.10% and Virgin Money by up to 0.39%. Before the increases, some high street lenders had dropped rates to below 4% such as HSBC which was offering a five-year fixed-rate of 3.99% for those with a 40% deposit or equity.
As of this morning (February 26), the average two-year fixed residential mortgage rate today sits at 5.73% and the average five-year fixed is 5.30%. Currently, the average two-year tracker mortgage rate is 6.14% and the average standard variable rate (SVR) mortgage is 8.17%.
London flat for rent for £1,400 a month with bed tucked away in kitchen cupboard
Going forward, finance expert at Moneyfactscompare Rachel Spingall says that lenders look to take a "cautious approach" to the mortgage deals they offer. Rachel said: "A selection of mortgage lenders reviewed their fixed rate pricing over the past couple of weeks, with some citing the volatile swap rate market as a contributing factor for increasing their fixed rates.
"It’s likely lenders will continue their cautious approach around repricing for the next few weeks, but this should not deter borrowers from seeking out a new deal. Lenders can pull deals if they have an influx of applications, so speed to grab an attractive package is essential. As always, its vital borrowers seek advice of a mortgage broker to review the options available to them.”