Lenders axe best deals in face of rate rise

BRITAIN’S biggest mortgage lenders have started axing top fixed deals as they prepare for a rate rise — and more rate hikes are expected to follow.

Last week Money Mail revealed that many banks were preparing for a rush of homebuyers hoping to snap up the last of the low-cost deals after Bank of England Governor Mark Carney warned interest rates may rise from January.

Now Barclays, Santander and Yorkshire Building Society have all moved to increase rates and pulled cheap deals, adding hundreds of pounds on to the cost of new loans, Barclays has hiked its cheapest ten-year fixed rate from 2.99 pc to 3.25 pc. On a typical £150,000 loan this will increase monthly repayments from £711 to £731 — costing homeowners £2,400 more over the ten years.

The bank has also increased the rate on its cheapest five-year deal by 0.2 pc to 2.59 pc, which will increase repayments by £15 a month to £680. Other deals, such as its 1.59 pc twoyear fix, have been withdrawn altogether.

Santander has increased a number of its two-year and five-year fixes by 0.1 pc. Its twoyear fixed rate for borrowers with a 40 pc deposit is increasing from 1.49 pc to 1.59 pc. This increases monthly repayments by £7 to £606 and the total cost by £168 to £15,539. It has also pulled its 2.19 pc five-year fix.

Yorkshire Building Society has similarly hiked rates on fixed deals of all lengths.

It has not touched its top two-year fixed rate of 1.07 pc for borrowers with a 35 pc deposit — but it has increased the fee from £1,499 to £1,675, adding £176 to the cost of the loan.

David Hollingworth, director of London & Country, says: ‘When major banks and building societies start cutting rates it can have a domino effect and lead to other lenders following suit. Homeowners should look to fix now while there are still some amazing deals on offer. If they wait for interest rates to rise before they make a move, they’ll miss out.’

Post Office has also tweaked some of its deals but still offers the lowest fixed rates. Its five-year deal at 2.14 pc works out at £646 a month and the total cost including a £995 fee is £39,755. Buyers need a 40 pc deposit.