Rise in mortgage prices before a possible rise in bank rates


Some of the nation’s largest lenders have raised mortgage rates in the past two weeks and, according to many in the industry, more may arrive soon.

The Bank of England (BoE) has made no secret that it is considering a hike in key rates early next year and, together with Chancellor Rishi Sunak referring to the Office for Budget Responsibility forecasting inflation of 4 % next year, an end to this period of ultra-low rates may well seem inevitable.

Lenders who have made increases recently include NatWest, Nationwide and TSB, just today.

“It was a little shocking that so many less than 1% deals were pulled when we’re used to seeing them,” said Aaron Strutt, director of products and communications for Trinity Financial.

He continues, “Borrowers are advised to lock in on super cheap deals while they can, especially if their mortgage is imminent or if they are in the process of buying a home. Even if rates go up, lenders have huge goals to meet, so they will want to stay as competitive as possible to attract customers. “

And private finance associate director Chris Sykes believes a rate hike could come sooner than next year. He explains: “With the base rate being 0.1% and the debt incredibly cheap for borrowers could not last forever and has, to some extent, fueled the pandemic real estate boom with homeowners changing tastes and preferences. SDLT requirements and vacations.

“In response to the BoE’s whispers of an upcoming rate hike to fight inflation, potentially now before Christmas, we have seen lenders react and have already started raising rates.

He adds: “The rental mortgage market was the last to cut rates significantly (with the best over two years now set at 0.99%) as these lenders are often more conservative and we think we will see an increase. higher percentage rates in this space due to this more conservative nature of the loan in the weeks and months to come.

Meanwhile, Phoebus Software’s sales and marketing director, Richard Pike, comments: “Rising rates, combined with the rising cost of living, will affect affordability for both borrowers who take out loans. new mortgages and for existing variable rate borrowers who may already be in financial difficulty. pressure following the pandemic.

He also points out an alarming consequence of a rate hike: “Especially with the end of the holiday scheme. In fact, we are already seeing loan officers recruiting many more collectors, which is a good indicator that they are preparing for an increase in arrears.

“Whether base rates go up or not, mortgage rates have started to rise, as markets have already forecast a rate hike, and maybe two or three more by the end of next year,” concludes Mark Harris, Managing Director of SPF Private Clients.

Visionary Finance Managing Director Hiten Ganatra offers some perspective: “As economic growth has accelerated and inflation rises, the only real tool available is to increase the base rate.

“We have to keep in mind that the BoE’s rate is only expected to rise 0.25%, which will still be half of what it was between 2008-2020.”

Most people Mortgage strategy we spoke to had one idea: borrowers should take advantage of low rates now while they last.

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