Warning UK mortgage rates set to rise further
June 12th, 2023 Mortgages
Borrowers are being warned mortgage rates are set to rise further as turbulence continues to hit the market.
Broker London & Country said lenders had been withdrawing deals and raising rates at a “relentless pace” and this week would “bring more of the same”.
Mortgage rates have gone up about 0.5 percentage points in the last month to approach an average fixed deal of 6%.
On Monday Santander became the latest big lender to temporarily withdraw new deals due to “market conditions”.
Last week, HSBC also took new deals for customers via brokers off the market but temporarily reopened them on Friday.
Fixed rates
About 1.5 million households are set to come off fixed mortgage deals this year and face a sharp rise in their monthly repayments.
Rates have been rising since recent data showed that UK inflation is not coming down as quickly as expected.
There have been predictions that the Bank of England will raise interest rates higher than previously thought, from their current 4.5% to as high as 5.5%.
It has a direct impact on mortgage lenders, many of whom have raised rates and taken deals off the market over the last few weeks.
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Credit rating
In the latest move, Santander said it was “temporarily withdrawing all our new business residential and buy-to-let fixed and tracker rates at 7.30pm on Monday 12 June”.
“We’re relaunching our full new business range on Wednesday 14 June,” it added.
David Hollingworth from London & Country told BBC Radio 4’s Today programme:
It’s been pretty relentless for the last couple of weeks. We’re back to that phase of you can’t hang around if you are looking at a fixed rate.”
He said lenders were being forced to reprice deals as the market shifted around them and those with cheaper deals faced a “tidal wave” of business.
“Unfortunately I think this week we may still have to see more of that happening.
“But hopefully those rates will just start to find a level and we’ll see things start to calm down in the near future.”
