Ten mortgage lenders raise rates in just one week

At least 10 lenders have raised mortgage rates in the past week – including giants Nationwide and Halifax – as expectations grow of an increase in the leading Bank Rate set by the Bank of England.

The mortgage deals affected are those where new borrowers sign up for “fixed rates” – where the interest rate they pay is locked for a set period, usually two or five years.

Rates have been at record lows for many months. Any clear sign that they are on the rise will prompt fresh calls for borrowers to take out an ultra-low rate while they can.

Nationwide, the biggest building society, raised the rate on its cheapest two-year fixed deal from 1.19pc to 1.44pc.

David Hollingworth, of broker London & Country, said that while the increases announced to date were small, they could easily “snowball” as lenders tweaked their rates in line with rivals.

“Although it’s not yet a seismic shift, this kind of repricing can pick up pace,” he said. “Borrowers that have so far failed to take advantage of the ultra-low fixed rates may want to consider if now is the time to act.”

The Bank Rate, set by the Bank of England, is the barometer against which most savings and borrowing rates rise and fall. It is now expected to post its first increase in more than a decade come next month. Fixed-rate mortgages are also more specifically dependent on the prevailing “swap rates”, which measure the cost at which one bank borrows from another. Swap rates for two- and five-year loans have approximately doubled during the past 12 months, indicating that fixed mortgage rates will also move up.

In line with Nationwide’s increase, Halifax has increased selected fixed rates by 0.2pc.

Three other lenders increased rates yesterday by between 0.1 and 0.25 percentage points: Monmouthshire Building Society, Newcastle Building Society and specialist lender Aldermore. Also making changes in the past week were Skipton, Leeds and Coventry Building Societies and Santander.

A Moneyfacts spokesman said: “The only way from here is up.” Sam Meadows