Mortgage lenders under fire for hike in fixed deals price by doubling latest interest rate hike
- The Bank of England on Thursday raised rates from 1 to 1.25 percent
- In two days, around 20 lenders have hiked rates or pulled deals altogether.
- L&C’s David Hollingsworth said: ‘Rise in rates has been a daily occurrence’
Mortgage lenders have been criticized for raising the price of fixed deals to double the latest interest rate hike.
A senior bank official warned yesterday that it is ready to introduce more aggressive rate hikes if prices continue to rise, after acknowledging that inflation has been underestimated.
This would mean more bad news for borrowers who have already seen a jump in mortgage deal costs.
In just two days, around 20 lenders have hiked rates or pulled deals altogether, according to research by broker L&C Mortgage. Some even hiked prices ahead of the Bank of England’s latest announcement.
All HSBC fixed deals rose 0.45, or 0.5 per cent, on Thursday morning, the third time in ten days that the bank changed its rates. NatWest also raised the price of fixed-rate deals by up to 0.27 points and nationwide by up to 0.4 points yesterday.
In just two days, around 20 lenders have hiked rates or pulled deals altogether, according to research by broker L&C Mortgage.
Other offers are disappearing altogether, while lenders catch up with the influx of applications from borrowers desperate to shield themselves against further rate hikes.
David Hollingsworth of L&C said: ‘The rate hike has been a daily occurrence throughout this year and it only seems to be accelerating. Of course there will be many more.’
HSBC said the increase was “not in anticipation of the Bank of England’s base rate decision” and that it regularly reviews its deals.
Fixed deals are priced based on swap rates – what banks charge each other for borrowing money – which have risen sharply over the past month. Experts warn that mortgage rates will almost certainly rise further, with the base rate predicted to rise to 3.5 percent by the end of next year.
The bank’s chief economist Hu Pill said it was ready to take ‘coercive’ action to contain inflation, which is projected to rise to more than 11 per cent by October after reaching 9 per cent last month, the highest in 40 years. It is the highest level.