- Nationwide Building Society, Virgin Money and Santander are all upping rates
Mortgage rates are back on the rise, as three major lenders hiked the interest on their home loans today.
Nationwide Building Society is upping rates by 0.19 percentage points, while Virgin Money is increasing them by to 0.15 percentage points.
Santander is making smaller increases of up to 0.07 percentage points.
It comes after months of gradual rate cuts that saw the lowest mortgage rates move from 4 per cent to about 3.5 per cent.
Nationwide and Santander previously offered some of the lowest rates on the market, with deals starting from 3.55 per cent on two-year fixes and 3.75 per cent for five-year deals.
They are not the first lenders to raise their rates. Barclays recently made some price increases, while NatWest raised some of its fixed rates by 0.10 percentage points.
More expensive: Lenders now appear to be upping mortgage rates after months of cuts
It comes as inflation is on the rise, and hopes of a reduction in the Bank of England’s base rate this week falter.
Consumer Price Index inflation rose to 3.4 per cent in December, according to the latest figures from the Office For National Statistics, up from 3.2 per cent in November.
Emma Jones, managing director at Runcorn-based mortgage broker When the Bank Says No, said: ‘With these increases from Nationwide, it’s now pretty clear that the road to lower rates may be longer and less predictable than expected, as inflation has dug in its heels.
‘Borrowers need to take note when a lender as large as Nationwide increases rates by up to 0.19 per cent.’
There is a growing sense that the Bank of England may only cut interest rates once this year, rather than the two cuts previously expected.
Hina Bhudia, partner, Knight Frank Finance, said: ‘Stronger-than-expected economic data has prompted investors to reassess their outlook for UK borrowing costs.
‘If the economy remains this resilient, the Bank of England may only cut rates once more this year.
‘That’s exerting upwards pressure on mortgage rates. These are fairly small increases at the moment, but they threaten to sap momentum from the recovery in activity that was strong through January.’
Meanwhile, Aaron Strutt of broker Trinity Financial puts Nationwide’s increases down to a flurry of customers at the beginning of the year, which may have proved unsustainable.
‘These Nationwide rate hikes are probably the biggest we have seen for a while but the building society has been topping the best-buy tables with some really cheap deals so no doubt it has been pretty busy,’ he says.
‘The major banks and building societies had such a busy start to the year that the sheer volume of rate cuts and criteria changes was always going to slow down.’
Those who plan to remortgage soon could consider locking in a rate now, in case they rise further.
It is often possible to do this up to six months before your current deal ends.
Nicholas Mendes of mortgage broker John Charcol said: ‘If your fixed rate ends in the next six months, it is worth reviewing your options now rather than later.
‘Many lenders allow borrowers to secure a new deal well ahead of time, and a broker can help compare the true overall cost, navigate criteria, and keep the application under review so you can move quickly if pricing improves.’