More blues for borrowers as mortgage rates creep up again
Last week’s higher-than-expected inflation figures coupled with forecasts that the Bank of England base rate could now rise as high as 5.5% and the spectre of spiralling swap rates have pushed mortgage up again across all LTV metrics. Indeed, just a week ago, Britain’s biggest lender Nationwide Building Society showed the shape of things to come as it raised its rates.
High LTV sees largest rises
According to Rightmove figures, the largest increases were at 95% loan to value (LTV), with its average two-year fixed rate has increased by 0.14% to 5.74% and the average five-year fixed rate has gone up by 0.12% to 5.27%.
This was followed by the average two-year fixed rate at 60% LTV which rose by 0.09% to 4.73% and the five-year fixed rate has gone up by 0.1% to 4.38%.
At 75% LTV, the average two-year fixed rate has ticked up by 0.05% to 4.79% and the average five-year fixed rate has increased by 0.02% to 4.43%.
‘Concern’ for potential borrowers
Rightmove’s mortgage expert Matt Smith said that in the past week, average mortgage rates had crept up across most fixed rate products as “lenders react to higher-than-anticipated inflation figures”.
He continued that there had been a withdrawal of some mortgage products from the market and those two factors could be “understandably concerning to those thinking of taking out a mortgage soon”.
Smith noted: “If we dig beneath the headlines, the majority of the products withdrawn so far are from smaller lenders with higher rate products in the 90% and 85% LTV brackets, with not much further movement from bigger lenders yet following the end of last week.
“This is why the average mortgage rate has actually edged downwards in some of the smaller deposit products compared to last week.”
He added: “It will likely take some weeks for the full effect of the latest inflation figures to impact the mortgage market, and we will get a better sense of the direction of travel when there is more movement from bigger lenders.”