Major lenders have made small increases to some of their fixed-rate mortgage loans in response to inflation not coming down as fast as expected and rising swap rates. Read on if you’re due to remortgage this year.
This week, five major lenders have raised their mortgage interest rates slightly. This is in response to an increase in swap rates, which are the fees that lenders pay to financial institutions for a stable source of funding. When swap rates go up, it’s common for mortgage interest rates to follow suit, and the opposite is also true.
HSBC, NatWest, Barclays, Leeds Building Society and Accord have announced rate increases, although they don’t apply to all mortgage products.
According to BBC News, NatWest has increased the rate for existing customers switching to a new deal from around 4.89% to 4.99% on a two-year fixed rate deal and 4.39% to 4.49% on a five-year fixed rate deal.
HSBC has increased several of its two and five-year fixed-rate deals, while Britain’s biggest lender, Halifax, has said it will increase rates on numerous deals by 0.2%.
Base rate expectations
These increases are also partly due to expectations around the Bank of England’s base rate, which was previously expected to be reduced in the summer. The rate currently sits at 5.25% (a 16-year high) and was predicted to be reduced in June.
However, due to inflation not falling as fast as expected, financial analysts are now predicting that the base rate reduction won’t happen until later in the year.
If you’re due to remortgage this year, you may be concerned about facing higher interest rates. We recommend speaking to an experienced broker as soon as you can rather than leaving it to chance. If your payments are likely to go up considerably, there may be options you can explore to help you in the short term. These could include extending the term of your mortgage (depending on your age) or switching to an interest-only deal.
The right course of action will depend on your personal situation, so it’s essential to seek expert advice as soon as possible.