Mortgages costs rise as rate cut faces delay

BANKS are pushing up mortgage costs amid warnings that economic uncertainty could delay rate cuts.

Coventry Building Society, NatWest and TSB have raised rates on fixed mortgages, following similar moves by Santander and Nationwide on Tuesday.

Data from financial analysts at Moneyfacts show average rates on two-year mortgages have risen from 5.59pc on Tuesday to 5.69pc. The increases are likely to hit the 1.5m homeowners who need to remortgage this year.

Nicholas Mendes, at the mortgage broker John Charcol, said: “Markets were a little over-exuberant at the start of the year. High street lenders had been sacrificing margin for volume in recent weeks, but this isn’t a viable long-term strategy.”

NatWest has increased the rates on some of its residential loans by up to 0.21pc while TSB’s have gone up by as much as 0.15pc. Santander raised its fixed-rate mortgages by up to 0.16pc on both residential and buy- to-let loans this week as Nationwide announced plans to increase prices by up to 0.25pc.

Lenders had expected the Bank Rate to fall within the first half of year, however this has been pushed back as consumer price inflation remains stuck at 4pc.

Official figures released on Thursday showed Britain entered recession last year, defined as two consecutive quarters of declining growth.

Economists have warned that pay is rising too fast for the Bank of England to cut interest rates after wages rose by 6.2pc in the year to December.

“The Monetary Policy Committee will be watching the pay data very closely,” said Andrew Goodwin, of Oxford Economics.

The Bank of England is next due to vote on a rate announcement on March 21.