Biggest jump in some UK average fixed mortgage rates since spring

Some average fixed homeowner mortgage rates on the market in the UK have recorded their biggest daily jump since spring this year, according to a financial information website.

The average two-year fixed-rate residential mortgage on the market on Tuesday morning was 5.54%, up by 0.04 percentage points from 5.50% on Monday, Moneyfactscompare.co.uk said.

The typical five-year fixed residential mortgage rate on the market increased to 5.57% on Tuesday, an increase of 0.05 percentage points, from 5.52% on Monday.

Moneyfacts said the two-year fixed-rate increase is the biggest daily rise since April 2.

The five-year fixed-rate rise is the biggest daily increase since March 31, it added.

Mortgage rates had been edging down in recent weeks after jumping earlier this year amid the conflict in the Middle East.

But a wave of lenders have been increasing their rates in recent days.

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said borrowers will "be deeply disappointed to see mortgage rates on the rise again, but this just shows how sensitive our financial markets are to geopolitical tensions.

"As feared, rising swap rates [which lenders use to price mortgages] are a signal for lenders to move quickly to re-price their ranges, as fixed mortgage rates tend to follow these moves."

She added: "Until there is more certainty in the market, mortgage rate moves are unlikely to calm in the weeks ahead, and it will be frustrating for buyers to see that the positive trajectory of rate cuts seen over recent weeks has been thrown off course."

Adam French, head of consumer finance at Moneyfactscompare.co.uk, said: "At least 25 lenders have increased selected mortgage rates in the last seven days, with only a handful reducing selected products.

"The likes of HSBC, Barclays, Nationwide Building Society, Lloyds Banking Group and NatWest were among those making hikes."

He said that higher funding costs leave lenders "with little choice but to reprice products, even if the Bank of England hasn't yet changed the base rate".

French added: "A more volatile world is a more expensive world, and recent months and years are clear evidence that borrowers cannot simply assume mortgage rates will continue moving in one direction.

"Inflation shocks and shifts in market sentiment can alter expectations overnight.

"While competition between lenders is still strong, another bout of volatility has quickly brought the latest rate cutting cycle to a halt.

"In the meantime, it is essential prospective borrowers stay on top of their options and seek independent advice."

By Vicky Shaw, Press Association Personal Finance Correspondent

Press Association: Finance

source: PA

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