Mortgage rates for new borrowers are continuing to rise.
In the past week alone at least 10 lenders, including some of the UK’s biggest, have announced rate rises for people taking out new deals.
Also, Bank of England figures show that the average two-year fixed rate deal, with a 25% deposit, has risen from 2.9% last September to 3.45% in March. September’s figure was the lowest on record for such deals following a recent peak in 2008 of 6.35%
The moves indicate that obtaining a mortgage is likely to become more expensive and difficult, despite interest rates, as set by the Bank of England being at a record low of 0.5% for almost three years.
Lenders argue that increasing mortgage rates are due to the rise in the cost of raising funds, from both ordinary savers and the wholesale financial markets, to then lend to homebuyers.
Among those making changes to parts of their mortgage ranges this week have been Abbey, HSBC, Halifax, Lloyds TSB, Santander, Britannia, and Cheltenham & Gloucester.
Prior to all this, lenders had started to rein in their riskier interest-only mortgage lending, with many lenders now demanding at least a 50% deposit from borrowers interested in this type of loan, and at the start of April the financial information service Moneyfacts noted that the past two months had seen a sudden drop in the total number of mortgage deals available to borrowers.
Their new deals, for fixed, tracker or discounted home loans, have typically been repriced with interest rates now between 0.1% and 0.4% higher than before.
In some cases, deals have simply been withdrawn, leaving existing but more expensive ones on offer.
In the past six weeks, several lenders have also announced increases to the cost of their standard variable rate mortgages for existing borrowers.
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