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Mortgages and finance – Latest
Renewed hostilities in the Middle East have pushed up energy costs and inflation.
At the same time, concerns over rising levels of government debt have sparked a sell-off in government bonds around the world, pushing up the cost of borrowing for governments, banks and businesses.
The financial markets are now pricing in a Bank of England base rate rise by the end of the year and another by March, taking it from its current 3.75% to 4.25%.
As a result, swap rates, which affect lenders’ funding costs for mortgages, have risen sharply over the past month. Two-year swaps have climbed from around 4.1% in early August to a recent high of 4.49%, with five-year swaps reaching a three-year high of 4.53%.
The mortgage rate cuts seen over the last few months are therefore coming to an end, with Barclays, Santander, TSB, NatWest, Virgin Money and Coventry Building Society among those announcing increases, and more lenders expected to follow.
Barclays is raising most of its two- and five-year fixed rates by 0.15 percentage points and Santander some rates by up to 0.25 points.
To protect themselves from any further rises, many borrowers are rushing to lock in a new mortgage four to six months in advance, which can normally be switched to a cheaper deal if rates fall.
Below is a selection of this month’s best buys from Moneyfacts.co.uk (remortgages):
Two-year fixed rates: 4.65% from Nationwide BS. Product fee £999. 60% LTV.
4.72% from Yorkshire BS. Product fee £1,495. 60% LTV.
Five-year fixed rates: 4.73% from Nationwide BS. Product fee £999. 60% LTV.
4.77% from first direct. Product fee £490. 60% LTV.
Discounted variable: 4.29% From Newbury BS for 3 years. Product fee £850. 75% LTV.br> 4.44% From Bath BS for 2 years. Product fee £999. 80% LTV.
BUY-TO-LET (BTL)
Best two-year fixed rate: 4.86% from HSBC. No fee. 60% LTV.
Five-year fixed rate: 4.62% from Barclays. Arrangement fee £899. 60% LTV.
Best Discounted variable: 4.65% For 5 years. From Newbury BS. Arrangement £950. 75% LTV.
The information we provide is our personal opinion and should not be relied upon for financial advice. Should you need financial advice or guidance, please contact an appropriate professional.
