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Lenders expected to raise rates

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12/01/2007

Most mortgage lenders are expected to increase the interest rates charged on their mortgages over the next few days, in response to Thursday’s rise in the Bank Rate from 5% to 5.25%.

Many are expected to increase their standard variable rates by the full 0.25%. All tracker products, where the rate paid by the borrow goes up and down exactly in line with the Bank Rate, were effected immediately.

On a £100,000 variable rate mortgage with a 25-year term, a 0.25% increase equates to an extra £15 a month on the repayment. The latest rise comes fairly hard on the heel of a 0.25% increase in November, which itself followed a 0.25% rise last July.

Peter Tutton, at Citizens Advice, said: “We are seeing a rapidly growing number of people falling behind with mortgage payments,and in some cases threatened with repossession.” But the UK’s savers were happy with the news, with a number of savings account providers putting their rates up by 0.25% immediately.

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