Image source, Getty Images
Some of the UK’s biggest banks are raising mortgage rates as expectations of when the Bank of England will cut interest rates are pushed back.
Barclays, HSBC and NatWest are all increasing some costs on fixed-rate mortgage deals from Tuesday.
Mortgage rates have risen over the past few weeks as views have changed on when the Bank might cut borrowing costs.
The Bank is now not expected to cut its benchmark rate as early or as often as previously thought.
The announcement from Barclays, which is lifting rates for the second time in the space of seven days, will see a 0.1% increase across a range of its mortgage products.
NatWest said it would raise some of its two and five-year “switcher” deals for existing customers by 0.1%.
HSBC added it was increasing some of its rates on Tuesday, but did not give details of the increases.
According to financial information service Moneyfacts, the average two-year fixed mortgage rate is 5.82%, while the average five-year fixed rate is 5.40%.
Lenders are lifting rates as they respond to changing predictions about the future direction of the Bank of England’s benchmark rate, which dictates borrowing costs and currently stands at 5.25%.
Bank predictions
The fall in the rate of inflation over the past few months had led many analysts to predict the Bank would begin cutting the rate from June.
However, recent data on inflation – which measures the pace at which prices are rising – has shown it is not falling as quickly as expected.
Events in the US have also been affecting markets. US inflation has also not fallen as quickly as predicted, pushing back expectations about when the central bank there, the Federal Reserve, will begin cutting rates.
The possibility of a delay to US interest rate cuts has affected markets globally, and is another factor feeding through to higher mortgage costs.
Last week, Chancellor Jeremy Hunt, told reporters at the International Monetary Fund Spring Meeting that “what happens in the US has a knock-on impact in the UK”.